Question
Assume that today is December 31,2018 and that the following information applies to Vermeil Airlines: After-tax operating income [EBIT(1 T)] for 2019 is expected to
Assume that today is December 31,2018 and that the following information applies to Vermeil Airlines: After-tax operating income [EBIT(1 T)] for 2019 is expected to be $435 million. The depreciation expense is expected to be $97 million. The capital expenditures are expected to be $216 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 12.7%. The WACC is 10.5%. The market value of the companys debt is $2.7 billion. 186 million shares of stock are outstanding. Using the corporate valuation model approach, what should be the companys stock price today?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started