Year Sales (Revenues) - Cost of Goods Sold (50% of Sales) - Depreciation = EBIT - Taxes (35%) = unlevered net income + Depreciation +(-) increase/(decrease) in working capital - capital expenditures 0 1 2 3 150,000 150,000 150,000 75,000 75,000 75,000 25,000 25,000 25,000 50,000 50,000 50,000 17,500 17,500 17,500 32,500 32,500 32,500 25,000 25,000 25,000 5,000 5,000 -10,000 -90,000 The net present value (NPV) for Epiphany's Project is closest to
Year Sales (Revenues) - Cost of Goods Sold (50% of Sales) - Depreciation = EBIT - Taxes (35%) = unlevered net income + Depreciation +(-) increase/(decrease) in working capital - capital expenditures 0 1 2 3 150,000 150,000 150,000 75,000 75,000 75,000 25,000 25,000 25,000 50,000 50,000 50,000 17,500 17,500 17,500 32,500 32,500 32,500 25,000 25,000 25,000 5,000 5,000 -10,000 -90,000 The net present value (NPV) for Epiphany's Project is closest to
Chapter14: Security Structures And Determining Enterprise Values
Section: Chapter Questions
Problem 8EP
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Question
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:
I need help to see how I could plug these numbers in my calculator. If you could show me how you found NPV in your calculator.
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