Question

4. Epiphany Industries is considering a new capital budgeting project that will last for two years. The revenue for the first year is 200,000 and revenues grow at an annual rate of 10%. The cost of goods sold is 50% of the revenue. The capital expenditure is 120,000. The tax rate is 35%. Epiphany plans on using a cost of capital of 12% to evaluate this project. The depreciation is straight-line depreciation. Please fill in the following blanks: 15 points (3 points each)

Time (the end of the year)	0	1	2
Free Cash Flow	(        )	(        )	(         )
NPV = (        )
IRR = (        )

FCF at time period 0 ___ rounded to the nearest $1

5. Epiphany Industries is considering a new capital budgeting project that will last for two years. The revenue for the first year is 200,000 and revenues grow at an annual rate of 10%. The cost of goods sold is 50% of the revenue. The capital expenditure is 120,000. The tax rate is 35%. Epiphany plans on using a cost of capital of 12% to evaluate this project. The depreciation is straight-line depreciation. Please fill in the following blanks: 15 points (3 points each)

Time (the end of the year)	0	1	2
Free Cash Flow	(        )	(        )	(         )
NPV = (        )
IRR = (        )

IRR ___ rounded to the nearest .01%

Answer 1

Question number 4 and 5 is same and detailed solution is above.