× If the firm plans to issue 200,000 shares of common stock, what is the estimated market value per share? (Ex Oo.00) No dollar sign, 2 decimal points * Free cash flow valuation Nabor Industries is considering going public but is unsure of a fair offering price for the company. Before hiring an investment banker to assist in making the public offering, managers at Nabor have decided to make their own estimate of the firm's common stock value. The firm's CFO has gathered data for performing the valuation using the free cash flow valua- tion model. The firm's weighted average cost of capital is 11%, and it has $1,500,000 of debt at market value and $400,000 of preferred stock at its assumed market value. The estimated free cash flows over the next 5 years, 2007 through 2011, are given below. Beyond 2011 to infinity, the firm expects its free cash flow to grow by 3% annually. Year (t) Free cash flow (FCF) 2007 $200,000 2008 250,000 2009 310,000 2010 3.50,000 2011 390,000 10.76 Correct answer 10.96

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Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.