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In: Finance
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 $80 million. The capital expenditures for 2017 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 3% per year. The required return on equity is 16%. The WACC is 12%. The market value of the company's debt is $2 billion. 140 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. $
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jeff jeffy answered 1 year agoRelated Solutions
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 $650 million.
The depreciation expense for 2017 is expected to be $200
million.
The capital expenditures for 2017 are expected to be $275
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 $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...
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 $70
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 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 $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 $450 million.
The depreciation expense for 2020 is expected to be $200
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 $110 million. The
capital expenditures for 2020 are expected to be $275 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 $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 $550 million.
The depreciation expense for 2019 is expected to be $50
million.
The capital expenditures for 2019 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 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 $500 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 5% per
year.
The required return...
Assume that today is December 31, 2014, and that the following information applies the Vermeil Airlines:...
Assume that today is December 31, 2014, and that the following
information applies the Vermeil Airlines:
Revenue for 2015 is expected to be $1,750 million
Operating Expenses (including depreciation and amortization) are
expected to be $1,075 million
Depreciation and amortization for 2015 will be $100 million
The company expects to have a 29.926% tax rate
The change in gross property, plant & equipment (PP&E)
is expected to be $200 million
The company anticipates that the change in net operating working...
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