Determine what should be the companys stock price today

Assignment Help Financial Econometrics
Reference no: EM13334487

Assume that today is December 31, 2012, and that the following information applies to Vermeil Airlines:

After-tax operating income [EBIT(1 - T)] for 2013 is expected to be $700 million.
The depreciation expense for 2013 is expected to be $90 million.
The capital expenditures for 2012 are expected to be $450 million.
No change is expected in net operating working capital.
The free cash flow is expected to grow at a constant rate of 7% per year.
The required return on equity is 16%.
The WACC is 10%.
The market value of the company's debt is $4 billion.
180 million shares of stock are outstanding.

Using the corporate valuation model approach, what should be the company's stock price today?

Reference no: EM13334487

Questions Cloud

What will ttcs dividend and capital gains yields be once : Taussig Technologies Corporation (TTC) has been growing at a rate of 14% per year in recent years. This same growth rate is expected to last for another 2 years, then decline to gn = 4%.
Calculate the pressure of your sample : You have a sample of Xenon in a rectangular container. The gas exerts a total force of 58.1 N perpendicuar to one of the container walls,  Calculate the pressure of your sample
What is the magnitude of the force between the two wires : Two long, straight, parallel wires of length 4.1 m carry parallel currents of 3.2 A and 1.1 A. What is the magnitude of the force between the two wires
Should personal use of the internet at work be permitted : Should personal use of the Internet at work be permitted, Should management be allowed to monitor all messages, Should employees be allowed to read and send personal e-mail during breaks or lunch time?
Determine what should be the companys stock price today : Assume that today is December 31, 2012, and that the following information applies to Vermeil Airlines: After-tax operating income [EBIT(1 - T)] for 2013 is expected to be $700 million. The depreciation expense for 2013 is expected to be $90 million.
Evaluate the external positive and negative criticisms : Evaluate the external positive and negative criticisms of the company BOEING political practices
Determine where will the block come to rest : a 2kg block of wood slides on the surface shown. all surfaces are frictionless, except the trough which is rough; the coefficient of kinetic friction there is 0.2 and the trough is 15m long. where will the block come to rest
What is meant by the concept of social crime : What is meant by the concept of "social crime?" Why is the very criminality of some of these offenses controversial? Provide two examples to illustrate.
What is the minimum mass of nahco3 : If 24mL of 6.6 M H2SO4 was spilled, what is the minimum mass of NaHCO3 that must be added to the spill to neutralize the acid? If 24mL of 6.6 M H2SO4 was spilled, what is the minimum mass of NaHCO3 that must be added to the spill to neutralize..

Reviews

Write a Review

Financial Econometrics Questions & Answers

  Determine what is the irr for the project

Your firm is contemplating the purchase of a new $674,000 computer-based order entry system. The system will be depreciated straight-line to zero over its six-year life. It will be worth $58,000 at that time.

  What is the total amount of interests for 20 years

You take a $5,000 loan with an interest rate of 10% and pay off a constant principal portion of $200 every year. Use the arithmetic progression.

  Find what are the number of copies sold in three years

Your finance text book sold 47,000 copies in its first year. The publishing company expects the sales to grow at a rate of 19.0 percent for the next three years, and by 6.0 percent in the fourth year.

  Will any of pats wages be exempt from social security

Pat Maninen earns a gross salary of $2,100 each week. Assume a rate of 6.2% on $106,800 for Social Security and 1.45% for Medicare. What are Pat's first week's deductions for Social Security and Medicare

  Determine if fund are managing should invest in the stock

Your first assignment is to determine if the fund you are managing should invest $25 million dollars in the stock of the company you have selected for your first analysis/investment decision.

  Find wacc of a company for long term debt

a company has 60% equity(common stock),30% longterm debt and 10% shortterm liabilities. The cost of equity(common stock) is 8%,while longterm debt is 6% respectively.

  Determine what must the expected return on the stock be

A stock has a beta of 1.14, the expected return on the market is 10 percent, and the risk-free rate is 3.5 percent. What must the expected return on this stock be

  Calculate the number of firecracker bundles for red cat

Red Cat Firecrackers is considering whether to build a large or small factory to produce its firecrackers. Regardless of the production method, each bundle of firecrackers sells for $4.00.

  Caculate the fair value of a stock with a beta

caculate the fair value of a stock with a beta of .90 if the riskless rate is 4% and the expected market return is 7% if the stock is expected to pay a dividend $.50 and is expected

  Determine what is the wacc for the company

Assume the company's tax rate is 35 percent. Debt: 5,000 6% coupon bonds outstanding, $1,000 par value, 25 years to maturity, selling for 105% of par; the bonds make semiannual payments.

  What required annual yield must be earned before investment

If transaction costs to buy and sell the securities are $2,200 and the securities will be held for three months, what required annual yield must be earned before the investment makes economic sense

  What is the percentage change in the price of the bonds

Bond J has a coupon rate of 4 percent. Bond S has a coupon rate of 14 percent. Both bonds have 10 years to maturity, make semiannual payments, and have a YTM of 8 percent.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd