Suppose Alcatel-Lucent has an equity cost of capital of 9.3%, market capitalization of $10.22 billion,...
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Suppose Alcatel-Lucent has an equity cost of capital of 9.3%, market capitalization of $10.22 billion, and an enterprise value of $14 billion. Suppose Alcatel-Lucent's debt cost of capital is 7% 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, : ? 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? Alcatel-Lucent's WACC is %. (Round to two decimal places.) 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, ? The NPV of the project is $_million. (Round to two decimal places.) c. If Alcatel-Lucent maintains its debt-equity ratio, what is the debt capacity of the project in part (b)? The debt capacity of the project in part(b) is as follows: (Round to two decimal places.) Year Debt capacity $ million $ million $ million $ million (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 1 2 3 FCF ($ million) - 100 51 102 68
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