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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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