(Answered) Supposenbspalcatel-lucent has an equity cost of capital of

Management Studies

Suppose? Alcatel-Lucent has an equity cost of capital of 9.9 %, market capitalization of $ 10.80 ?billion, and an enterprise value of $ 15 billion. Suppose? Alcatel-Lucent's debt cost of capital is 5.9 % and its marginal tax rate is 37 %

a. What is? Alcatel-Lucent's WACC?

b. If? Alcatel-Lucent maintains a constant? debt-equity ratio, what is the value of a project with average risk and the expected free cash flows as shown? here,

Year 0 1 2 3

FCF ($ million) -100 47 101 70

c. If? Alcatel-Lucent maintains its? debt-equity ratio, what is the debt capacity of the project in part ?(b?)?

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