Quantitative Problem 1: Assume today is
December 31, 2016. Barrington Industries expects that its 2017
after-tax operating income [EBIT(1 – T)] will be $450 million and
its 2017 depreciation expense will be $60 million. Barrington's
2017 gross capital expenditures are expected to be $100 million and
the change in its net operating working capital for 2017 will be
$20 million. The firm's free cash flow is expected to grow at a
constant rate of 5% annually. Assume that its free cash flow occurs
at the end of each year. The firm's weighted average cost of
capital is 8.7%; the market value of the company's debt is $3
billion; and the company has 170 million shares of common stock
outstanding. The firm has no preferred stock on its balance sheet
and has no plans to use it for future capital budgeting projects.
Using the free cash flow valuation model, what should be the
company's stock price today (December 31, 2016)? Round your answer
to the nearest cent. Do not round intermediate calculations.
$______ per share