capital requirements, has led to an alternative stock valuation approach,

present value of its expected future free cash flows plus the market value of its non$-$operating assets:

Free cash flows are generally forecasted for $5$ to $10$ years, after which it is assumed that the final forecasted free cash flow will grow at some long$-$run $C$ rate. Once the firm reaches its horizon date, when cash flows begin to grow at a constant rate, the equation to calculate the continuing value of the firm operations at that date is:

Horizon value $=V_{\text{C}\text{o}\text{m}\text{p}\text{o}\text{n}\text{y}\text{'}\text{s}\text{o}\text{p}\text{e}\text{r}\text{a}\text{t}\text{i}\text{o}\text{n}\text{s}ott}=N=FC\frac{F_{N+1}}{\text{W}\text{A}\text{C}\text{C}-g_{FCF}}$

Discount the free cash flows back at the firm's weighted average cost of capital to arrive at the value of the firm today. Once the value of the firm's opera are calculated and the value of non$-$operating assets are added, then the market value of debt and preferred are subtracted to arrive at the market value equity. The market value of equity is divided by the number of common shares outstanding to estimate the firm's intrinsic per$-$share value.

We present $2$ examples of the corporate valuation model. In the first problem, we assume that the firm is a mature company so its free cash flows grow at constant rate. In the second problem, we assume that the firm has a period of nonconstant growth.

Quantitative Problem $1$: Assume today is December $31,2019,$ Barrington Industries expects that its $2020$ after$-$tax operating income $[$EBIT$(1-$T$)]$ will $6$ $$410$ million and its $2020$ depreciation expense will be $$70$ million. Barrington's $2020$ gross capital expenditures are expected to be $$110$ million and the ch in its net operating working capital for $2020$ will be $$30$ million. The firm's free cash flow is expected to grow at a constant rate of $6\mathrm{.}5\%$ annually. Assume th its free cash flow occurs at the end of each year. The firm's weighted average cost of capital is $8\mathrm{.}2\%$; the market value of the company's debt is $$2\mathrm{.}3$ billion; and the company has $180$ million shares of common stock outstanding. The firm has no preferred stock on its balance sheet and has no plans to use it for future capital budgeting projects. Also, the firm has zero non$-$operating assets. Using the corporate valuation model, what should be the company's stock pri today $($December $31,2019)?$ Do not round intermediate calculations. Round your answer to the nearest cent.