Epiphany Industries Is Considering a New Capital Budgeting Project That

question 60

Multiple Choice

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: The free cash flow for the last year of Epiphany's project is closest to ________.

• A) $65,750
• B) $59,175
• C) $49,313
• D) $52,600

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Definitions:

LIFO

LIFO, or Last In, First Out, is an inventory valuation method where the last items to be added to inventory are assumed to be the first ones sold.

Ending Inventory

The total value of a company's merchandise, goods, and products held at the end of an accounting period.

Sales Revenue

The income received by a company from its sales of goods or the provision of services.

Gross Profit

The difference between revenue and the cost of making a product or providing a service, before deducting overheads, payroll, taxation, and interest payments.