Epiphany Industries is considering a new capital budgeting project that will last for three years. The projec Time left 1:29 initial investment of $90,000 in year 0. Epiphany plans on using an opportunity cost of capital of 12% to evaluate this project. Based on extensive research, it has prepared the following incremental cash flow projections: Sales (Revenues) Cost of Goods Sold (50% of Sales) Depreciation EBIT Taxes (30%) Profit after tax Changes in NOWC The net present value (NPV) for Epiphany's Project is closest to: O a. $39,000 O b. $14,348 O c. $29,400 O d. $35,364 Year 1 125 000 -62 500 -30 000 32 500 -9 750 22 750 5 000 Year 2 125 000 -62 500 -30 000 32 500 -9 750 22 750 5 000 Year 3 125 000 -62 500 -30 000 32 500 -9 750 22 750 -10 000

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Epiphany Industries is considering a new capital budgeting project that will last for three years. The projec Time left 1:29:41
initial investment of $90,000 in year 0. Epiphany plans on using an opportunity cost of capital of 12% to evaluate this
project. Based on extensive research, it has prepared the following incremental cash flow projections:
Sales (Revenues)
Cost of Goods Sold (50% of Sales)
Depreciation
EBIT
Taxes (30%)
Profit after tax
Changes in NOWC
The net present value (NPV) for Epiphany's Project is closest to:
a. $39,000
b. $14,348
c. $29,400
O d. $35,364
Year 1
125 000
-62 500
-30 000
32 500
-9 750
22 750
5 000
Year 2
125 000
-62 500
-30 000
32 500
-9 750
22 750
5 000
Year 3
125 000
-62 500
-30 000
32 500
-9 750
22 750
-10 000
Transcribed Image Text:Epiphany Industries is considering a new capital budgeting project that will last for three years. The projec Time left 1:29:41 initial investment of $90,000 in year 0. Epiphany plans on using an opportunity cost of capital of 12% to evaluate this project. Based on extensive research, it has prepared the following incremental cash flow projections: Sales (Revenues) Cost of Goods Sold (50% of Sales) Depreciation EBIT Taxes (30%) Profit after tax Changes in NOWC The net present value (NPV) for Epiphany's Project is closest to: a. $39,000 b. $14,348 c. $29,400 O d. $35,364 Year 1 125 000 -62 500 -30 000 32 500 -9 750 22 750 5 000 Year 2 125 000 -62 500 -30 000 32 500 -9 750 22 750 5 000 Year 3 125 000 -62 500 -30 000 32 500 -9 750 22 750 -10 000
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