The cost of common equity using the CAPM isv

Wealth maximization as the goal of a firm implies enhancing the wealth of ________

A) the auditors B) the creditors C) the federal reserve D) the firm's stockholders

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

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: Year 0 1 2 3 Sales (Revenues) 100,000 100,000 100,000 - Cost of Goods Sold (50% of Sales) 50,000 50,000 50,000 - Depreciation 30,000 30,000 30,000 = EBIT 20,000 20,000 20,000 - Taxes (35%) 7,000 7,000 7,000 = unlevered net income 13,000 13,000 13,000 + Depreciation 30,000 30,000 30,000 +/(-) increase/(decrease) in working capital 5,000 5,000 5,000 - capital expenditures -90,000 A) $45,600 B) $28,500 C) $38,000 D) $53,200