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Suppose Alcatel-Lucent has an equity cost of capital of 9.8%, market capitalization of $11.20 billion, and an enterprise value of $16 billion. Suppose Alcatel-Lucent's debt
Suppose Alcatel-Lucent has an equity cost of capital of 9.8%, market capitalization of $11.20 billion, and an enterprise value of $16 billion. Suppose Alcatel-Lucent's debt cost of capital is 7.3% 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, 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? Data table Alcatel-Lucent's WACC is \%. (Round to two decimal places.) (Click on the following icon in order to copy its contents into a spreadsheet.)
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