Suppose Alcatel-Lucent has an equity cost of capital of 9.8%, market capitalization of $9.36 billion, and an enterprise value of $13 billion. Suppose Alcatel-Lucent's debt cost of capital is 6.3% and its marginal tax rate is 32%.

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, LOADING... ?

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

Data Table X (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.) Year 0 1 2 3 FCF ($ million) - 100 97 71 55 IN Print Done