Question
In: Finance
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 $110
million.
The capital expenditures for 2020 are expected to be $375
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 on equity is 13%.
The WACC is 12%.
The firm has $210 million of non-operating assets.
The market value of the company's debt is $3.940 billion.
180 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.
$
Solutions
Expert Solution
Price of the stock is given
as=((650+110-375)/(12%-6%)+210-3.940*1000)/180
=14.92592593
jeff jeffy answered 2 years agoRelated Solutions
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
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After-tax operating income [EBIT(1 - T)] for 2020 is expected to
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The depreciation expense for 2020 is expected to be $70
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Assume that today is December 31, 2019, and that the following information applies to Abner Airlines:...
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Assume that today is December 31, 2019, and that the following information applies to Abner Airlines:...
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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
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Assume that today is December 31, 2019, and that the following information applies to Abner Airlines:...
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