Question

Assume that today is December 31,2018 and that the following information applies to Vermeil Airlines: After-tax...

Assume that today is December 31,2018 and that the following information applies to Vermeil Airlines:

  • After-tax operating income [EBIT(1 – T)] for 2019 is expected to be $577 million.
  • The depreciation expense is expected to be $106 million.
  • The capital expenditures are expected to be $177 million.
  • No change is expected in net operating working capital.
  • The free cash flow is expected to grow at a constant rate of 4.6% per year.
  • The required return on equity is 12.3%.
  • The WACC is 8.6%.
  • The market value of the company’s debt is $3 billion.
  • 252 million shares of stock are outstanding.

Using the corporate valuation model approach, what should be the company’s stock price today?

Homework Answers

Answer #1

Formulae

Formulae as above

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, 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 $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 $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 $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...
Assume that today is December 31, 2018, and that the following information applies to Abner Airlines:...
Assume that today is December 31, 2018, and that the following information applies to Abner Airlines: After-tax operating income [EBIT(1 - T)] for 2019 is expected to be $500 million. The depreciation expense for 2019 is expected to be $180 million. The capital expenditures for 2019 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 $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...