Quantitative Problem 1: Assume today is December 31, 2016. Barrington Industries expects that its 2017 after-tax...

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Quantitative Problem 1: Assume today is December 31, 2016. Barrington Industries expects that its 2017 after-tax operating income (EBIT(1-T)] will be $400 million and its 2017 depreciation expense will be $65 million. Barrington's 2017 gross capital expenditures are expected to be $120 million and the change in its net operating working capital for 2017 will be $30 million. The firm's free cash flow is expected to grow at a constant rate of 6% annually. Assume that its free cash flow occurs at the enc of each year. The firm's weighted average cost of capital is 8.6%; the market value of the company's debt is $2.35 billion; and the company has 190 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. Using the free cash flow valuation model, what should be the company's stock price today (December 31, 2016)? Round your answer to the nearest cent. Do not round intermediate calculations. per share 7.47 Hide Feedback Incorrect Check My Work Feedback Realize that the correct valuation model is the free cash flow valuation model. Realize that this example involves constant growth. Because the firm is in a constant growth state, this calculation is actually the value of the firm in Year 0. Once the value of the firm is determined, you must subtract the market value of the firm's debt and preferred to calculate the market value of the firm's equity Then divide this value by the number of common shares outstanding to find the per-share value of the firm's common stock. Quantitative Problem 1: Assume today is December 31, 2016. Barrington Industries expects that its 2017 after-tax operating income (EBIT(1-T)] will be $400 million and its 2017 depreciation expense will be $65 million. Barrington's 2017 gross capital expenditures are expected to be $120 million and the change in its net operating working capital for 2017 will be $30 million. The firm's free cash flow is expected to grow at a constant rate of 6% annually. Assume that its free cash flow occurs at the enc of each year. The firm's weighted average cost of capital is 8.6%; the market value of the company's debt is $2.35 billion; and the company has 190 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. Using the free cash flow valuation model, what should be the company's stock price today (December 31, 2016)? Round your answer to the nearest cent. Do not round intermediate calculations. per share 7.47 Hide Feedback Incorrect Check My Work Feedback Realize that the correct valuation model is the free cash flow valuation model. Realize that this example involves constant growth. Because the firm is in a constant growth state, this calculation is actually the value of the firm in Year 0. Once the value of the firm is determined, you must subtract the market value of the firm's debt and preferred to calculate the market value of the firm's equity Then divide this value by the number of common shares outstanding to find the per-share value of the firm's common stock.