Question
MY HOMEWORK IS TIMED please answer as soon as possible; thanks. Suppose Alcatel-Lucent has an equity cost of capital of 9.9%, market capitalization of $9.49
MY HOMEWORK IS TIMED please answer as soon as possible; thanks.
Suppose Alcatel-Lucent has an equity cost of capital of 9.9%, market capitalization of $9.49 billion, and an enterprise value of $13 billion. Suppose Alcatel-Lucent's debt cost of capital is 6.9% and its marginal tax rate is 33%.
a. What is Alcatel-Lucent's WACC?
b. If Alcatel-Lucent maintains a constant debt-equity ratio, what is the value of a project with average risk and the expected free cash flows as shown on the table below?
c. If Alcatel-Lucent maintains its debt-equity ratio, what is the debt capacity of the project in part (b)?
Year FCF ($Million)
0-100
153
297
370
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