Use the information for the question(s) below. Epiphany Industries is considering a new capital budgeting...
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Use the information for the question(s) below.
Epiphany Industries is considering a new capital budgeting project that will last for three years. Epiphany plans on using a cost of capital of 12% to evaluate this project. Based on extensive research, it has prepared the following incremental cash flow projects:
Year
0
1
2
3
Sales (Revenues)
100,000
100,000
100,000
Cost
of Goods Sold (50% of Sales)
50,000
50,000
50,000
Capital
Cost Allowance
13,500
22,950
16,065
=EBIT
36,500
27,050
33,935
Taxes
(35%)
12,775
9,468
11,877
=Unlevered
net income
23,725
17,582
22,058
+Capital
Cost Allowance
13,500
22,950
16,065
+Changes
to working capital
5,000
5,000
10,000
Capital
Expenditures
90,000
The net present value (NPV) for Epiphany's Project is closest to:
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