Use the Information for the Question(s)below

question 22

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 (Millions) 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)8.75%.
• B)7.10%.
• C)9.60%.
• D)7.50%.

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Definitions:

Preference Rules

Guidelines or criteria used by individuals to make choices or decisions between alternatives based on personal likes or dislikes.

Evoked Set

A group of relevant brands that a prospective consumer is favorably familiar with when considering a purchase decision.

Functional Risk

The potential for a product or service to fail to meet expected performance standards or fulfill its intended purpose, leading to dissatisfaction or loss.

Gender Specific

aspects, behaviors, or attributes that are distinctly associated with a particular sex.