Capital Budgeting. Ephemeral Industries is considering a new capital budgeting project that will last for three years. Ephemeral plans on using a cost of capital of 12% to evaluate this project. Based on extensive research, it has prepared the following information. The project is expected to produce $150,000 in new sales for the 3 operating years. Cost of Goods sold is 50% of revenues. The project entails the purchase of a capital asset for $80,000 that will cost $10,000 to be shipped and installed. The asset will be depreciated using a straight line 4-year schedule. The firms marginal tax rate is 35%. The project requires an increase in NWC in the first year of operations of $5,000 which will be reduced to the original level in year 3. The asset will be sold for $70,000 in the fourth year. Complete the cashflow budget for this project.

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