Assume that this new project is of average risk for Omnicron and that the firm wants to hold constant its debt to equity ratio.

1. Omnicron's weighted average cost of capital is closest to:

A) 7.10%

B) 7.50%

C) 9.60%

D) 8.75%

2. The NPV for Omnicron's new project is closest to:

A. $23.75

B. 27.50

C. 28.75

D. 25.75

3. The Debt Capacity for Omnicron's new project in year 0 is closest to:

A. $38.75

B. $75.50

C. $50.25

D. $10.25

4. The Debt Capacity for Omnicron's new project in year 1 is closest to:

A. $38.75

B. $48.25

C. $50.25

D. $58.00

Omicron Industries' Market Value Balance Sheet ($ Millions) and Cost of Capital Assets Cash Other Assets Liabilities Cost of Capital Debt 0 Debt 500 Equity 200 5% 12% 3% 300 qui Omicron Industries New Project Free Cash Flows Year 0 2 Free Cash Flows ($100) $40 $50 $60