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* Using the corporate valuation model approach, what should be the company's stock price today? Round your answer to the nearest cent. $

* Using the corporate valuation model approach, what should be the company's stock price today? Round your answer to the nearest cent. $

Essentials Of Investments
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
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**Aber Airlines Financial Analysis** *Assumptions as of December 31, 2021:* 1. **After-tax Operating Income:** - EBIT(1-T) for 2022: $650 million. 2. **Depreciation Expense:** - Expected for 2022: $100 million. 3. **Capital Expenditures:** - Expected for 2022: $375 million. 4. **Net Operating Working Capital:** - No change expected. 5. **Free Cash Flow Growth:** - Expected to grow at a constant rate of 3% per year. 6. **Required Return on Equity:** - 14%. 7. **Weighted Average Cost of Capital (WACC):** - 12%. 8. **Non-operating Assets:** - $190 million. 9. **Market Value of Debt:** - $2,454 billion. 10. **Shares of Stock Outstanding:** - 350 million shares. *Task:* Using the corporate valuation model, determine the company's stock price today. Round the answer to the nearest cent.
Transcribed Image Text:**Aber Airlines Financial Analysis** *Assumptions as of December 31, 2021:* 1. **After-tax Operating Income:** - EBIT(1-T) for 2022: $650 million. 2. **Depreciation Expense:** - Expected for 2022: $100 million. 3. **Capital Expenditures:** - Expected for 2022: $375 million. 4. **Net Operating Working Capital:** - No change expected. 5. **Free Cash Flow Growth:** - Expected to grow at a constant rate of 3% per year. 6. **Required Return on Equity:** - 14%. 7. **Weighted Average Cost of Capital (WACC):** - 12%. 8. **Non-operating Assets:** - $190 million. 9. **Market Value of Debt:** - $2,454 billion. 10. **Shares of Stock Outstanding:** - 350 million shares. *Task:* Using the corporate valuation model, determine the company's stock price today. Round the answer to the nearest cent.
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