Question
Suppose Alcatel-Lucent has an equity cost of capital of 10.7%, market capitalization of $9.80 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 $9.80 billion, and an enterprise value of $14 billion. Suppose Alcatel-Lucent's debt cost of capital is 6.9% and its marginal tax rate is 34% a. What is Alcatel-Lucent's WACC? Alcatel-Lucent's WACC is 8.86% (Round to two decimal places.) 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? Year---0----1----2---3 FCF(-100)--54--99---67.,What is the NPV? b. The NPV of the project is 85.08 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) Round to two decimal places.) Year 0 1 2 3 Debt Capacity ? million ?million ?million ?million I have parts A & B down, how do you solve for part C?
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