Please help with part c) This hasnt been answered well in other similar problems on here because I think the expert doesnt have all the info on type of problem part c is. They do not want just one answer for the entire project, but have it broken down by year. I am not sure how they get the "leveraged value" to get to the debt capacity.

Suppose Alcatel-Lucent has an equity cost of capital of 10.5%, market capitalization of $11.52 billion, and an enterprise value of $16 billion. Suppose Alcatel-Lucent's debt cost of capital is 6.8% and its marginal tax rate is 33%.

a. What is Alcatel-Lucent's WACC? (I already got 8.84%)

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 (already got $85.92)

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

(Click on the following icon 2 in order to copy its contents into a spreadsheet.) 1 Year FCF ($ million) 0 - 100 2 105 3 65 51 c. If Alcatel-Lucent maintains its debt-equity ratio, what is the debt capacity of the project in part (b)? The debt capacity of the project in part (b) is as follows: (Round to two decimal places.) Year 1 2 3 Debt capacity $ million $ million $ million million S This is an example of how Question C above should be set up to answer the question. It doesnt want just 1 Debt capacity ratio, it wants it for all the years Year 0 1 2 3 FCF ($ million) -100 60 110 80 V ($ million) 207.01 166.92 72.98 0.00 D=dx V $68.31 $55.08 $24.08 $0.00