SHOW ALL WORK AND STEPS OUT NO CREDIT FOR NO WORK SHOWN

3. Use the information for the question(s) below. Omicron Industries: Market Value Balance Sheet (S Millions) and Cost of Capital Cash Assets Liabilities Cost of Capital Debt 200 300 Debt Equity 6% 12% 35% Other Assets 500 Omicron Industries New Project Free Cash Flows Year Free Cash Flows S100 $40 $50 $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. Calculate Omicron's weighted average cost of capital. Calculate the NPV for Omicron's new project. a. b. 4. Discuss the advantages and limitations of using the weighted average cost of capital as a discount rate to evaluate capital budgeting projects. 5. Briefly explain how the firm's equity beta changes with changes in its debt-equity ratio when taxes are considered