What should be the company stock price today

Assignment Help Financial Management

Reference no: EM132010280

CORPORATE VALUE MODEL 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 $550 million. The depreciation expense for 2017 is expected to be $190 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 3% per year. The required return on equity is 13%. The WACC is 11%. The market value of the company's debt is $3 billion. 260 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.

$______

Reference no: EM132010280

Questions Cloud

Post-earnings announcement drift or momentum : From a behavioral perspective, the anomaly known as post-earnings announcement drift or momentum is best explained by

What is firm sustainable growth rate : What is the firm’s sustainable growth rate? What would be the maximum possible growth rate if the firm did not sell any new debt or equity in the coming year?

Constant growth valuation : CONSTANT GROWTH VALUATION Holtzman Clothiers's stock currently sells for $40 a share. What stock price is expected 1 year from now?

The capm method for the equity component : Compute the WACC using the CAPM method for the equity component.

What should be the company stock price today : CORPORATE VALUE MODEL. Using the corporate valuation model approach, what should be the company's stock price today? CORPORATE VALUE MODEL

Define project budgeting and project scheduling : Define project budgeting. Define project scheduling. Define project execution.

What is the stock current value per share : The required rate of return on the stock, rs, is 19%. What is the stock's current value per share?

Capm and portfolio return : If you invest the money in a stock with a beta of 1.15, what will be the required return on your $5.5 million portfolio?

Stock is expected to pay dividend every year : What is price of stock expected to be in 4 years if the stock is expected to pay dividend every year forever, the expected return for stock is 10.28% per year

User Account

All Pages