Alcatel-lucent maintains its debt-equity ratio

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Reference no: EM131188136

Suppose Alcatel-Lucent has an equity cost capital of 10.1%, market capitalization of $10.95 billion, and an enterprise value of $15.0 billion with a debt cost of capital of 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 and the following expected free cash flows?

Year---0----1----2---3 FCF(-100)--48--101---70.,

What is the NPV?

(b) Round all answer to two decimal places.

Reference no: EM131188136

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