Suppose Alcatel$-$Lucent has an equity cost of capital of $10\mathrm{.}9\%,$ market capitalization of $$11\mathrm{.}04$ billion, and an

enterprise value of $$16$ billion. Suppose Alcatel$-$Lucent's debt cost of capital is $5\mathrm{.}9\%$ 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 here, $?$

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

Data table

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