Value of project with average risk-expected free cash flows

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Reference no: EM131930222

Suppose? Alcatel-Lucent has an equity cost of capital of 9.4%?, market capitalization of $11.04 ?billion, and an enterprise value of $16 billion. Suppose? Alcatel-Lucent's debt cost of capital is 5.8% and its marginal tax rate is 34%.

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:

FCF ($ million) (Year 0) -100 (Year 1) 49 (Year 2) 102 (Year 3) 73

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

Reference no: EM131930222

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