Assume that today is December 31, 2019, and that the following information applies to Abner Airlines: After-tax operating income [EBIT(1 - T)] for 2020 is expected to be $650 million. The depreciation expense for 2020 is expected to be $120 million. The capital expenditures for 2020 are expected to be $500 million. No change is expected in net operating working capital. The free cash flow is expected to grow at a constant rate of 7% per year. The required return on equity is 16%. The WACC is 9%. The firm has $199 million of non-operating assets. The market value of the company's debt is $4.177 billion. 250 million shares of stock are outstanding. Using the corporate valuation model approach, what should be the company's stock price today? Do not round intermediate calculations. Round your answer to the nearest cent.
Assume that today is December 31, 2019, and that the following information applies to Abner Airlines: After-tax operating income [EBIT(1 - T)] for 2020 is expected to be $650 million. The depreciation expense for 2020 is expected to be $120 million. The capital expenditures for 2020 are expected to be $500 million. No change is expected in net operating working capital. The free cash flow is expected to grow at a constant rate of 7% per year. The required return on equity is 16%. The WACC is 9%. The firm has $199 million of non-operating assets. The market value of the company's debt is $4.177 billion. 250 million shares of stock are outstanding. Using the corporate valuation model approach, what should be the company's stock price today? Do not round intermediate calculations. Round your answer to the nearest cent.
Financial Management: Theory & Practice
16th Edition
ISBN:9781337909730
Author:Brigham
Publisher:Brigham
Chapter2: Financial Statements, Cash Flow,and Taxes
Section: Chapter Questions
Problem 17P: Athenian Venues Inc. just reported the following selected portion of its financial statements for...
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Assume that today is December 31, 2019, and that the following information applies to Abner Airlines:
Using the corporate valuation model approach, what should be the company's stock price today? Do not round intermediate calculations. Round your answer to the nearest cent. $ ? |
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