Assume that today is December 31, 2021, and that the following information applies to Abner Airlines: After-tax operating income [EBIT(1 T)] for 2022 is expected $450 million. The depreciation expense for 2022 is expected to be $80 million. The capital expenditures for 2022 are expected to be $225 million. No change is expecte 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 9%. The has $192 million of nonoperating assets. The market value of the company's debt is $2.580 billion. 150 million shares of stock are outstanding. Using the corporate valu model approach, what should be the company's stock price today? Do not round intermediate calculations. Round your answer to the nearest cent.
Assume that today is December 31, 2021, and that the following information applies to Abner Airlines: After-tax operating income [EBIT(1 T)] for 2022 is expected $450 million. The depreciation expense for 2022 is expected to be $80 million. The capital expenditures for 2022 are expected to be $225 million. No change is expecte 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 9%. The has $192 million of nonoperating assets. The market value of the company's debt is $2.580 billion. 150 million shares of stock are outstanding. Using the corporate valu model approach, what should be the company's stock price today? Do not round intermediate calculations. Round your answer to the nearest cent.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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am. 32.
![Assume that today is December 31, 2021, and that the following information applies to Abner Airlines: After-tax operating income [EBIT(1 - T)] for 2022 is expected to be
$450 million. The depreciation expense for 2022 is expected to be $80 million. The capital expenditures for 2022 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 3% per year. The required return on equity is 16 %. The WACC is 9%. The firm
has $192 million of nonoperating assets. The market value of the company's debt is $2.580 billion. 150 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.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F832f6b93-1aa9-4316-a702-c0bbf3dfbd67%2F7ac5aa83-f874-4f72-b57b-89b4e82e85d3%2Ficozy2c_processed.png&w=3840&q=75)
Transcribed Image Text:Assume that today is December 31, 2021, and that the following information applies to Abner Airlines: After-tax operating income [EBIT(1 - T)] for 2022 is expected to be
$450 million. The depreciation expense for 2022 is expected to be $80 million. The capital expenditures for 2022 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 3% per year. The required return on equity is 16 %. The WACC is 9%. The firm
has $192 million of nonoperating assets. The market value of the company's debt is $2.580 billion. 150 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.
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