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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
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 $500 million. The depreciation expense for 2022 is expected to be $150 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 5% per year. The required return on equity is 13%. The WACC is 9%. The firm has $198 million of nonoperating assets. The market value of the company's debt is $3.027 billion. 330 million shares
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