Epiphany Industries is considering a new capital budgeting project that will last for three years. Epiphany planson using a cost of capital of 12% to evaluate this project. Based on extensive research, it has prepared thefollowing incremental cash flow projects:YearSales (Revenues)Cost of Goods Sold (50% of Sales)- Depreciation= EBIT- Taxes (20%)= unlevered net income-0OA. $37,500OB. $60,000OC. $50,000O D. $70,0001125,00062,50025,00037,5007,50030,00025,000- 5000+ Depreciation+ changes to working capital- capital expenditures- 90,000The free cash flow for the first year of Epiphany's project is closest to:2125,00062,50025,00037,5007,50030,00025,000-50003125,00062,50025,00037,5007,50030,00025,000-5000

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Description: Epiphany Industries is considering a new capital budgeting project that will last for three years. Epiphany planson using a cost of capital of 12% to evaluate this project. Based on extensive research, it has prepared thefollowing incremental cash f

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Epiphany Industries is considering a new capital budgeting project that will last for three years Epip on using a cost of capital of 12% to evaluate this project. Based on extensive research, it has prepa following incremental cash flow projects: Year Sales (Revenues) Cost of Goods Sold (50% of Sales) - Depreciation = EBIT - Taxes (20%) = unlevered net income + Depreciation + changes to working capital capital expenditures 0 - 90,000 1 2 125,000 125,000 62,500 62,500 25,000 25,000 37,500 37,500 7,500 7,500 30,000 25,000 -5000 30,000 25,000 -5000 3 125,000 62,500 25,000 37,500 7,500 30,000 25,000 -5000

Epiphany Industries is considering a new capital budgeting project that will last for three years Epip on using a cost of capital of 12% to evaluate this project. Based on extensive research, it has prepa following incremental cash flow projects: Year Sales (Revenues) Cost of Goods Sold (50% of Sales) - Depreciation = EBIT - Taxes (20%) = unlevered net income + Depreciation + changes to working capital capital expenditures 0 - 90,000 1 2 125,000 125,000 62,500 62,500 25,000 25,000 37,500 37,500 7,500 7,500 30,000 25,000 -5000 30,000 25,000 -5000 3 125,000 62,500 25,000 37,500 7,500 30,000 25,000 -5000

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter12: Capital Budgeting: Decision Criteria

Section: Chapter Questions

Problem 8P: Edelman Engineering is considering including two pieces of equipment, a truck and an overhead pulley...

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