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Assume that today is December 31, 2000 and that the following information applies to Vermeil Airlines: A. After-tax operating income [EBIT(1-t)] for 2001 is expected to be $500 million. B. The company's depreciation expense for 2001 is expected to be $100 million. C. The company's capital expenditures for 2001 are expected to be $200 million D. No change is expected in the company's net operating working capital.

Assume that today is December 31, 2000 and that the following information applies to Vermeil Airlines:

A. After-tax operating income [EBIT(1-t)] for 2001 is expected to be $500 million.

B. The company’s depreciation expense for 2001 is expected to be $100 million.

C. The company’s capital expenditures for 2001 are expected to be $200 million

D. No change is expected in the company’s net operating working capital.

E. The company’s free cash flow is expected to grow at a constant rate of 6 percent per year.

F. The company’s cost of equity is 14 percent.

G. The company’s WACC is 10 percent.

H. The market value of the company’s debt is $3 billion.

I. The company has 200 million shares of stock outstanding.

Using the free cash flow approach, what should the company’s stock price be today?

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