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Omicron Industries' Market Value Balance Sheet ($ Millions) and Cost of Capital Assets Liabilities Cost...

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Finance

Omicron Industries' Market Value Balance Sheet ($ Millions) and Cost of Capital Assets Liabilities Cost of Capital Cash 0 Debt 200 Debt 6% Other Assets 500 Equity 300 Equity 12% c 35% Omicron Industries New Project Free Cash Flows Year 0 1 2 3 Free Cash Flows ($100) $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.

a) Omicron's weighted average cost of capital is closest to______________

b) The NPV for Omicron's new project is closest to ___________________

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