Question

Assume that today is December 31, 2016, and that the following information applies to Abner Airlines:...

Assume that today is December 31, 2016, and that the following information applies to Abner Airlines:

After-tax operating income [EBIT(1 - T)] for 2017 is expected to be $600 million.
The depreciation expense for 2017 is expected to be $160 million.
The capital expenditures for 2017 are expected to be $225 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 15%.
The WACC is 10%.
The market value of the company's debt is $3 billion.
310 million shares of stock are outstanding.

Using the corporate valuation model approach, what should be the company's stock price today? Round your answer to the nearest cent. Write out your answer completely. For example, 0.00013 million should be entered as 130.

Homework Answers

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Assume that today is December 31, 2016, and that the following information applies to Abner Airlines:...
Assume that today is December 31, 2016, and that the following information applies to Abner Airlines: After-tax operating income [EBIT(1 - T)] for 2017 is expected to be $550 million. The depreciation expense for 2017 is expected to be $110 million. The capital expenditures for 2017 are expected to be $400 million. No change is expected in net operating working capital. The free cash flow is expected to grow at a constant rate of 6% per year. The required return...
Assume that today is December 31, 2019, and that the following information applies to Abner Airlines:...
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 $450 million. The depreciation expense for 2020 is expected to be $190 million. The capital expenditures for 2020 are expected to be $225 million. No change is expected in net operating working capital. The free cash flow is expected to grow at a constant rate of 6% per year. The required return...
Assume that today is December 31, 2019, and that the following information applies to Abner Airlines:...
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 $600 million. The depreciation expense for 2020 is expected to be $100 million. The capital expenditures for 2020 are expected to be $200 million. No change is expected in net operating working capital. The free cash flow is expected to grow at a constant rate of 6% per year. The required return...
Assume that today is December 31, 2019, and that the following information applies to Abner Airlines:...
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 $600 million. The depreciation expense for 2020 is expected to be $80 million. The capital expenditures for 2020 are expected to be $425 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...
Assume that today is December 31, 2019, and that the following information applies to Abner Airlines:...
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 $700 million. The depreciation expense for 2020 is expected to be $70 million. The capital expenditures for 2020 are expected to be $300 million. No change is expected in net operating working capital. The free cash flow is expected to grow at a constant rate of 4% per year. The required return...
Assume that today is December 31, 2019, and that the following information applies to Abner Airlines:...
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 $700 million. The depreciation expense for 2020 is expected to be $200 million. The capital expenditures for 2020 are expected to be $475 million. No change is expected in net operating working capital. The free cash flow is expected to grow at a constant rate of 4% per year. The required return...
Assume that today is December 31, 2019, and that the following information applies to Abner Airlines:...
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 $550 million. The depreciation expense for 2020 is expected to be $150 million. The capital expenditures for 2020 are expected to be $450 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...
Assume that today is December 31, 2019, and that the following information applies to Abner Airlines:...
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 $100 million. The capital expenditures for 2020 are expected to be $350 million. No change is expected in net operating working capital. The free cash flow is expected to grow at a constant rate of 4% per year. The required return...
Assume that today is December 31, 2019, and that the following information applies to Abner Airlines:...
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 $140 million. The capital expenditures for 2020 are expected to be $425 million. No change is expected in net operating working capital. The free cash flow is expected to grow at a constant rate of 5% per year. The required return...
Assume that today is December 31, 2019, and that the following information applies to Abner Airlines:...
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 $400 million. The depreciation expense for 2020 is expected to be $190 million. The capital expenditures for 2020 are expected to be $350 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...