3) NextGen Clothes Inc is considering a new capital budgeting project that will last for three years. The rm plans on using a cost of capital of 12% to evaluate this project. Based on extensive research, it has prepared the following incremental cash ow projections: 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 - Depreciation 30,000 30,000 30,000 = EBIT 20,000 20,000 20,000 - Taxes (35%) 7,000 7,000 7,000 = unlevered net income 13,000 13,000 13,000 + Depreciation 30,000 30,000 30,000 + changes to working capital -5,000 -5,000 10,000 - capital expenditures -90,000 The rm would like to know how sensitive the project's N'PV is to changes in the discount rate. How much can the discount rate vary before the NPV reaches zero? a) 0% b) 7.14% c) 11.95% (1) 19.14%