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)

5. Suppose Lucent Technologies has an equity cost of capital of 10%, marketd capitalization of $10.8 billion, and an enterprise value of $14.4 billion. Suppose Lucent's debt cost of capital is 6.1% and its marginal tax rate is 35%.
a. What is Lucent's WACC?
b. If Lucent maintains a constant debt-equity ratio, what is the

The Weighted Average Cost of Capital Method
4.
Suppose Goodyear Tire and Rubber Company is considering divesting one of its manufacturing plants. The plant is expected to generate free cash flows of $1.5 million per year, growing at a rate of 2.5% per year. Goodyear has an equity cost of capital of 8.5%, a debt cost of capit

ExxonMobil's required return for equity, Re is 14%. Its required return for debt, Rd is 8%, its debt-to-total-value ratio L, is 35%, and its marginal tax rate, T is 40%, calculate its (adjusted WACC)?

A firm has a capital structure with 40% debt, 50% equity, and 10% preferred stock. If the following information is given, calculate company's WACC.
YTM on firm's bond is 7.2%
Beta is 1.2; risk free rate 5%; market risk premium is 5%
Preferred stock pays dividend of $8 and sells for $100

Copernicus Inc. has determined that its target capital structure will be 60% debt, 10% preferred stock, and 30% common stock. As the financial manager, the CFO has informed you that the company's before tax cost of debt is 10%, preferred stock is 14%, and common stock is 16%. In addition, the company's marginal tax rate is 4

Several years ago the Haverford Company sold a $1,000 par value bond that now has 25 years to maturity and an 8.00% annual coupon that is paid quarterly. The bond currently sells for $900.90, and the company's tax rate is 40%. What is the component cost of debt for use in the WACCcalculation?

WACC
A company has determined that its optimal capital structure consists of 30 percent debt and 70 percent equity. Given the following information, calculate the firm's weighted average cost of capital.
Rd = 6%
Tax rate = 35%
P0 = $35
Growth = 0%
D0 = $3.00

A company is funded equally by debt and equity and investors expect 12% per annum return from investing in the firms equity and 4% (net of tax) per annum to invest in its debt. What is the firms WACC? If the firm suffers a credit downgrade and investors require a return of 6% (net of tax) what is the new WACC?
Also, how does

If the current interest rate on new debt is 9% and the marginal tax rate is 40% and the capital structure is:
Debt: $104,000,000
Common Equity: $156,000,000
Total Liabilities and Equity: $260,000,000
How do I figure the weighted average cost of capital (WACC)?