Suppose Alcatel-Lucent has an equity cost of capital of 10.5%, market capitalization of $10.22 billion, and an enterprise value of $14 billion. Suppose Alcatel-Lucent's debt cost of capital is 5.5% and its marginal tax rate is 35%.

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,

Year 0 1 2 3 FCF ($ million) -100 52 99 75

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