Question 482 pts

Given the forecast below, estimate the fair market value per share of Kenmore Airs equity at the end of 2017 if the company has 50 million shares outstanding and the market value of its interest-bearing liabilities on the valuation date equals $300 million. Assume that after 2021, earnings before interest and tax will remain constant at $220 million, depreciation will equal capital expenditures in each year, and working capital will not change. Kenmore Airs weighted-average cost of capital is 11% and its tax rate is 40%.

Forecast for Kenmore Air, Incorporated
Year	2018	2019	2020	2021
Free cash flow ($ millions)	40	85	97	112