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:

\begin{array}{lrrr}\hline\text { Year }&0&1&2&3\\\hline \text { Sales (Revenues) } && 100,000 & 100,000 & 100,000 \\\hline \text { - Cost of Goods Sold (50\% of Sales) } && 50,000 & 50,000 & 50,000 \\\hline \text { - Depreciation } && 30,000 & 30,000 & 30,000 \\\hline \text { = EBIT } && 20,000 & 20,000 & 20,000 \\\hline \text { - Taxes }(30 \%) && 6000 & 6000 & 6000 \\\hline \text { = unlevered net income } && 14,000 & 14,000 & 14,000 \\\hline \text { + Depreciation } && 30,000 & 30,000 & 30,000 \\\hline+ \text { changes to working capital } && -5000 & -5000 & 10,000 \\\hline \text { - capital expenditures } & -90,000\\\hline\end{array}

-The free cash flow for the first year of Epiphany's project is closest to?
A) $39,000
B) $25,000
C) $43,000
D) $45,000

Which of the Following Would You NOT Consider When Making

Multiple Choice

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