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 $400 million. The depreciation expense for 2022 is expected to be $90 million. The capital expenditures for 2022 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 7% per year. The required return on equity is 13%. The WACC is 12%. The firm has $206 million of nonoperating assets. The market value of the company's debt is $4.011 billion. 190 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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estors require an 8% rate of return on Mather Company's stock (i.e., rs=8% ). a. What is its value if the previous dividend was D0=$4.00 and investors expect dividends to grow at a constant annual rate of (1) 6%, (2) 0%, (3) 4%, or (4) 7% ? Do not round intermediate calculations. Round your answers to the nearest cent. (1) $ (2) \$ (3) $ (4) $ b. Using data from part a, what would the Gordon (constant growth) model value be if the required rate of return was 8% and the expected growth rate was (1) 8% or (2) 12% ? Round your answers to the nearest cent. If the value is undefined, enter N/A. (1) $ (2) $ Are these reasonable results? I. These results show that the formula makes sense if the required rate of return is equal to or greater than the expected growth rate. II. These results show that the formula does not make sense if the expected growth rate is equal to or less than the required rate of return. III. These results show that the formula does not make sense if the required rate of return is equal to or less than the expected growth rate. IV. These results show that the formula does not make sense if the required rate of return is equal to or greater than the expected growth rate. V. These results show that the formula makes sense if the required rate of return is equal to or less than the expected growth rate. c. Is it reasonable to think that a constant growth stock could have g>rs ? I. It is not reasonable for a firm to grow indefinitely at a rate equal to its required return. II. It is not reasonable for a firm to grow indefinitely at a rate higher than its required return. III. It is reasonable for a firm to grow indefinitely at a rate higher than its required return. IV. It is not reasonable for a firm to grow even for a short period of time at a rate higher than its required return. V. It is not reasonable for a firm to grow indefinitely at a rate lower than its required return