Epiphany Industries is considering a new capital budgeting project that will last for plans on using a cost of capital of 12% to evaluate this project. Based prepared the following incremental cash flow projects: three years. Epiphany on extensive research, it has 100,000 100,000 100,000 Sales (Revenues) 50,000 0,000 50000 0,000 Cost ofGoods sold (50% of Sales) The company's marginal tax rate is 35%. The equipment needed would cost S90 000 right now and investments into working capital is expected to increase by $5,000 immediately. The machine will be depreciated using 4 year MACRS. Assume that the machine will be sold for $10,000 at the end of year 3 and the working capital investments can be recovered at the end of the project as well. Year 0 Depreciation33.33 44.45 14.81 7.41 30. Estimate the free cash flows for the project (16 points) 0 3 Year Sales (Revenues) Cost ofGoods Sold (50% of Sales) Depreciation EBIT Taxes Unlevered Net Income 1001000 100.c0D 1aa,a0 50000 (50 000 29,97 1995 30,071 43331 129,997 10497 |13836|28105 Depreciation urchase of the machine alvage Value et Free Cash Flow Calculate NPV and IRR (4 points) Working Capital