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: 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 - Capital Cost Allowance 13,500 22,950 16,065 EBIT 36,500 27.050 33.935 Taxes (35%) 12,775 9468 11.877 = unlevered net income 23,725 17,582 22,058 + Capital Cost Allowance 13,500 22950 16,065 + changes to working capital -5000 -5000 10.000 - capital expenditures -90.000 The free cash flow for the last year of Epiphany's project is closest to: $48, 123 $35, 352 $43,000 $32, 225 $34,253