Revenues - Cost of Goods Sold - Depreciation =EBIT - Taxes (20%) =Unlevered net income +Depreciation - Additions to Net Working Capital - Capital Expenditures =Free Cash Flow O O O O A. by 16% B. by 32% C. by 19% Year 0 D. by 26% - 325,000 Visby Rides, a livery car company, is considering buying some new luxury cars. After extensive research, they come up with the above estimates of free cash flow from this project. Visby learns that a competitor is thinking of offering similar services, thus reducing Visby's sales. By how much could sales fall before the net present value (NPV) was zero, given that the cost of capital is 11%, and that cost of goods sold is 45% of revenues? Year 1 400,000 - 150,000 - 100,000 150,000 - 30,000 120,000 100,000 - 30,000 190,000 Year 2 400,000 - 150,000 - 100,000 150,000 - 30,000 120,000 100,000 - 30,000 190,000 Year 3 400,000 - 150,000 - 100,000 150,000 - 30,000 120,000 100,000 - 30,000 190,000 Sar ns FI df FI df

Revenues - Cost of Goods Sold - Depreciation = EBIT - Taxes (20\%) - Unlevered net income +Depreciation - Additions to Net Working Copital - Capital Expenditures =Free Cash Flow Year 0 Visby Rides, a livery car company, is considering buying some new luxury cars. After extensive research, they come up with the above estimates of free cash flow from this project. Visby learns that a compettor is thinking of oflering similar services, thus reducing Visby's sales. By how much could sales fall before the net. present value (NPV) was zero, given that the cost of capital is 11%, and that cost of goods sold is 45% of revenues? A. by 16% B. by 32% C. by 19% D. by 26%