What is the value of project with average risk

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Reference no: EM131924001

Suppose? Alcatel-Lucent has an equity cost of capital of 9.2 %, market capitalization of $10.80 ?billion, and an enterprise value of $15 billion. Suppose? Alcatel-Lucent's debt cost of capital is 5.9% 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,

Year 0 1 2 3

FCF ($ million) -100 51 105 71

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

Reference no: EM131924001

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