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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 $577 million.
  • The depreciation expense is expected to be $106 million.
  • The capital expenditures are expected to be $177 million.
  • No change is expected in net operating working capital.
  • The free cash flow is expected to grow at a constant rate of 4.6% per year.
  • The required return on equity is 12.3%.
  • The WACC is 8.6%.
  • The market value of the companys debt is $3 billion.
  • 252 million shares of stock are outstanding.

Using the corporate valuation model approach, what should be the companys stock price today?

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