Suppose Alcatel-Lucent has an equity cost of capital of 9.8%, market capitalization of $10.50 billion, and an enterprise value of $15 billion. Assume that Alcatel-Lucent's debt cost of capital is 7.5%, its marginal tax rate is 33%, the WACC is 8.3675%, and it maintains a constant debt-equity ratio. The firm has a project with average risk. The expected free cash flow, levered value, and debt capacity are as follows: E. Thus, the NPV of the project calculated using the WACC method is $187.74 million - $100 million = $87.74 million. a. What is Alcatel-Lucent's unlevered cost of capital? X b. What is the unlevered value of the project? i Data Table c. What are the interest tax shields from the project? What is their present value? d. Show that the APV of Alcatel-Lucent's project matches the value computed using the WACC method. a. What is Alcatel-Lucent's unlevered cost of capital? (Click on the following icon e in order to copy its contents into a spreadsheet.) Alcatel-Lucent's unlevered cost of capital is %. (Round to four decimal places.) 0 1 2 3 - 100 50 98 74 Year FCF ($ million) vt D=dx vt 187.74 153.45 68.29 0.00 56.32 46.04 20.49 0.00 Print Done