# Lucent WACC Calculation

Suppose Lucent has cost of equity of 9%, equity market capitalization of $10 billion, and total debt 4 billion and 0.4 billion of excess amount of cash. Suppose Lucent's cost of debt is 6% and its marginal tax rate is 35% (Note: Use Net Debt concept (ND) and leverage ratio = ND/(ND+E)).

#Question 3.1: What is Lucent's WACC (after tax)?

#Question 3.2: If Lucent maintains a constant leverage ratio, what is the value of a project with average risk and the following expected free cash flows ($millions)? NPV analysis using WACC method

Free Cash Flows: -120 (t=0), 60 (t=1), 100 (t=2), 80 (t=3)

https://brainmass.com/business/weighted-average-cost-of-capital/lucent-wacc-calculation-581136

#### Solution Summary

Calculation on WACC and a project's NPV

$2.19