1. [1? points] a. Suppose that Rose Industries is considering the acquisition of another rm in its industry for $100 million. The acquisition is expected to increase Rose's free cash ow by $5 million the rst year, and this contribution is expected to grow at a rate of 3% every year thereafter. Rose curreme maintains a debt to equity ratio of 1, its marginal tax rate is 40%, its cost of debt run. is 6%. and its cost of equity n; is 10%. Rose Industries will maintain a constant debt-equity ratio for the acquisition. Given that Rose issues new debt of $50 million initially to fund the acquisition, what is the total value of this acquisition using the APV method? b. [1? points] Iota Industries Market Value Balance Sheet (3; Millions] and Cost of Capital Assets _ 'Liabilics . _ Cost of Capital _ Cash 250 Debt 650 Debt Tili- Other Assets 1200 E uit 300 ' \"14% To 35% Iota Industries New Project Free Cash Flows Ycar u 1 ' 2 3 Free-Cash Flows $250 svs $150 $100 Assume that this new project is of average risk for Iota and that the rm wants to hold constant its debt to equity ratio. a. What is lota's weighted average cost of capital? b. What is the NPV for lota's new project