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Suppose Alcatel-Lucent has an equity cost of capital of 10.7%, market capitalization of $10.22 billion, and an enterprise value of $14 billion. Suppose Alcatel-Lucent's debt
Suppose Alcatel-Lucent has an equity cost of capital of 10.7%, market capitalization of $10.22 billion, and an enterprise value of $14 billion. Suppose Alcatel-Lucent's debt cost of capital is 6.2% and its marginal tax rate is 36% 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)? Suppose Alcatel-Lucent has an equity cost of capital of 10.7%, market capitalization of $10.22 billion, and an enterprise value of $14 billion. Suppose Alcatel-Lucent's debt cost of capital is 6.2% and its marginal tax rate is 36% 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)
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