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

Assume that this new project is of average risk for Omicron and that the firm wants to hold constant its debt to equity ratio. Task 1 You have the following information: Omicron Industries Market Value Balance Sheet ($ Millions) and Cost of Capital Assets Cash Other Assets Liabilities Cost of Capital 0 Debt 200 Debt 500 Equity 300 Equity Omicron Industries New Project Free Cash Flows Year 0 1 2 3 FCFs ($100) $40 $50 $60 6% 12% 35%

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