5. 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 projections: Year 0 1 2 3 Sales (Revenues) 100,000 100,000 100,000 - Cost of Goods Sold 50,000 50,000 50,000 - Depreciation 30,000 30,000 30,000 = EBIT 20,000 20,000 20,000 Taxes (35%) 7000 7000 7000 = unlevered net income 13,000 13,000 13,000 + Depreciation 30,000 30,000 30,000 + changes to working capital -5000 -5000 10,000 - capital expenditures 90,000 (1) What is the NPV of this project? (2) Epiphany is worried about the reliability of the sales forecast. How sensitive is the project's NPV to a 10% change in sales? (Assuming sales affects COGS but doesn't affect NWC) (3) How sensitive is the project's NPV to a 10% change in COGS