Consider Alcatel-Lucent's project in Problem 7. a. What is Alcatel-Lucent's unlevered cost of capital? b. What is the unlevered value of the project? c. What are the interest tax shields from the project? What is their present value? d. Show that the APV of Alcatel-Lucent's project matches the value computed using the WACC method a. 10.8 14.4-10.8 14.4 10% + 14.4 6.1% = 9.025% b. VU 50 100 70 + 1.09025 1.090252 + 1.090253 = 184.01 c. Using the results from problem 5(c): Year 0 1 2 3 FCF 100 50 100 70 VL 185.86 151.64 64.52 0 D = d*VL 46.47 37.91 16. 13 0.00 Interest 2.83 2.31 0.98 Tax Shield 0.99 0.81 0.34 The present value of the interest tax shield is PV (ITS) =- 0.99 0.81 0.34 1.09025 1.090252 1.090253 = 1.85 d. VL = APV = 184.01 + 1.85 = 185.86 This matches the answer in problem 5