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What should be the company stock price today

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Reference no: EM132816691

Problem - CORPORATE VALUE MODEL - 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 $400 million.

The depreciation expense for 2019 is expected to be $140 million.

The capital expenditures for 2019 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 6% per year.

The required return on equity is 14%.

The WACC is 10%.

The firm has $200 million of non-operating assets.

The market value of the company's debt is $3.875 billion.

200 million shares of stock are outstanding.

Using the corporate valuation model approach, what should be the company's stock price today?

Reference no: EM132816691

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