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: 0 1 3 -- Year Sales (Revenues) Cost of Goods Sold (50% of Sales) - Depreciation = EBIT - Taxes (35%) = unlevered net income + Depreciation + changes to working capital - capital expenditures 125,000 62,500 30,000 32,500 11,375 21,125 30,000 - 5000 2 125,000 62,500 30,000 32,500 11,375 21,125 30,000 - 5000 125,000 62,500 30,000 32,500 11,375 21,125 30,000 -5000 - 90,000 The free cash flow for the first year of Epiphany's project is closest to: $46,125 $34,594 $64,575 $55,350