32. 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 projection: 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 E EBIT 20,000 20,000 20,000 Taxes (35%) 7,000 7,000 7,000 = unlevered net income 13,000 13,000 13,000 30,000 30,000 30,000 + Depreciation 7+ increase/(decrease) in working capital capital expenditures 5,000 5,000 5,000 -90,000 The free cash flow for the first year of Epiphany's project is a. $45,600 b. $28,500 c. $38,000 d. $53,200