Use the Information for the Question(s)below

question 21

Multiple Choice

Use the information for the question(s) below.
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 projections:
-The free cash flow for the first year of Epiphany's project is closest to:

• A)$43,000
• B)$25,000
• C)$38,000
• D)$45,000

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Definitions:

Accrued Interest

Interest that has accumulated on a bond since the last interest payment was made but has not yet been paid to the bondholder.

Quote Sheet

A document or digital view listing the price quotes for various financial instruments or commodities, often used in trading.

Convertible Bond

A type of bond that can be converted into a predetermined amount of the company's equity, usually at the discretion of the bondholder.

Market Conversion Value

The current market value of a convertible security if it were converted into the underlying shares of stock today.