Suppose Alcatel-Lucent has an equity cost of capital of

9.5%,

market capitalization of

$9.36

billion, and an enterprise value of

$13

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?

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 54 99 73

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

(b)?

a. What is Alcatel-Lucent's WACC?

Alcatel-Lucent's WACC is

nothing%.

(Round to two decimal places.)