QUESTION 7 Omicron Industries' Market Value Balance Sheet (5 Millions) and Cost of Capital Assets Cash Other Assets 0 500 Liabilities Debt Equity 200 300 Cost of Capital Debt Equity 6% 12% 35% Omicron Industries New Project Free Cash Flows Year 0 1 2 Free Cash Flows $40 $50 3 $60 Assume that this new project is of average risk for Omicron and that the firm wants to hold constant its debt to equity ratio. Omicron's Unlevered cost of capital is closest to: A. 9.60% B. 7.10% O C. 7.50% D. 8.75%