The Debt Capacity for Omicron's new project in year 2 is closest to:
A)$55.25
B)$38.75
C)$22.00
D)$33.00

Question

Quizplus · Accepted Answer

C)r_wacc = 11ea7cce_3c9c_613a_928c_e79de35dceda_TB1626_11 r_E + 11ea7cce_3c9c_613b_928c_fb5332cd0ff3_TB1626_11 r_D(1 - τ_c),where D = net debt = Debt - Cash r_wacc = 11ea7cce_3c9c_613c_928c_0fea34691a2f_TB1626_11 (.12)+ 11ea7cce_3c9c_884d_928c_eb2fade82f13_TB1626_11 (.06)(1 - .35)= .0876 11ea7cce_3c9c_884e_928c_2742d20075dd_TB1626_11 = 11ea7cce_3c9c_884f_928c_09ee3bc48b78_TB1626_11 = $55.17 D₂ = d × 11ea7cce_3c9c_af60_928c_0f87f31bc669_TB1626_11 D₂ = 11ea7cce_3c9c_af61_928c_f3354f8d6f87_TB1626_11 ($55.17)= $22.06

The Debt Capacity for Omicron's New Project in Year 2