Use the Information for the Question(s) Below

question 93

Multiple Choice

Use the information for the question(s) below.
Omicron Industries' Market Value Balance Sheet ($ millions) and Cost of Capital
Omicron Industries' New Project Free Cash Flows
Assume that this new project is of average risk for Omicron and that the firm wants to hold constant its debt-to-equity ratio.
-The debt capacity for Omicron's new project in year 0 is closest to:

• A) $38.75
• B) $75.50
• C) $50.25
• D) $10.25

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Substantive Unconscionability

A legal principle that allows courts to refuse to enforce contracts that are grossly unfair or one-sided in favor of the party with superior bargaining power.

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