Question
MY HOMEWORK IS TIMED please answer as soon as possible; thanks. Suppose Alcatel-Lucent has an equity cost of capital of 9.7%, market capitalization of $8.97
MY HOMEWORK IS TIMED please answer as soon as possible; thanks.
Suppose Alcatel-Lucent has an equity cost of capital of 9.7%, market capitalization of $8.97 billion, and an enterprise value of $13 billion. Suppose Alcatel-Lucent's debt cost of capital is 6.8% and its marginal tax rate is 38%.
a.What is Alcatel-Lucent's WACC? Alcatel-Lucent's WACC % is?
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 below. The NPV of the project is -- $ millions.
c.If Alcatel-Lucent maintains its debt-equity ratio, what is the debt capacity of the project in part (b) is? (From year 0-3)
YearFCF ($Million)
0-100
147
297
369
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