SupposeAlcatel-Lucent has an equity cost of capital of 9.1%,market capitalization of $11.20billion, and an enterprise value of $16.0 billion with a debt cost of capital of 7.2% and its marginal tax rate is 37%.

a. What isAlcatel-Lucent's WACC?

b. IfAlcatel-Lucent maintains a constantdebt-equity ratio, what is the value of a project with average risk and the following expected free cashflows?

Year	0	1	2	3
FCF ($ million)	100	54	99	70

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