Today is December 31, 2001. The following information applies to Vermeil Airlines: After-tax, operating income [EBIT

Question:

Today is December 31, 2001. The following information applies to Vermeil Airlines:
• After-tax, operating income [EBIT (1 - T)] for 2002 is expected to be $500 million.
• The company's depreciation expense for 2002 is expected to be $100 million.
• The company's capital expenditures for 2002 are expected to be $200 million.
• No change is expected in the company's net operating working capital.
• The company's is expected to grow at a constant rate of 6 percent per year.
• The company's is 14 percent.
• The company's WACC is 10 percent.
• The market value of the company's debt is $3 billion.
• The company has 200 million shares of stock outstanding.
Using the approach, what should the company's stock price be today?
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