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 valuation model. The firm's weighted average cost of capital is 15%, and it has $1,530,000 of debt at market value and $310,000 of preferred stock in terms of market value. The estimated free cash flows over the next 5 years,2020 through2024, are given in the table, Year (t) Free cash flow(FCF) 2020 $230,000 2021 $310,000 2022 $340,000 2023 $370,000 2024 $420,000 Beyond 2024 to infinity, the firm expects its free cash flow to grow by 4% annually. a.Estimate the value of Nabor Industries' entire company by using the free cash flow valuation model. b.Use your finding in part a, along with the data provided above, to find Nabor Industries' common stock value. c.If the firm plans to issue 200,000 shares of common stock, what is its estimated value per share? I need all parts answered
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 valuation model. The firm's weighted average cost of capital is 15%, and it has $1,530,000 of debt at market value and $310,000 of preferred stock in terms of market value. The estimated free cash flows over the next 5 years,2020 through2024, are given in the table, Year (t) Free cash flow(FCF) 2020 $230,000 2021 $310,000 2022 $340,000 2023 $370,000 2024 $420,000 Beyond 2024 to infinity, the firm expects its free cash flow to grow by 4% annually. a.Estimate the value of Nabor Industries' entire company by using the free cash flow valuation model. b.Use your finding in part a, along with the data provided above, to find Nabor Industries' common stock value. c.If the firm plans to issue 200,000 shares of common stock, what is its estimated value per share? I need all parts answered
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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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 valuation model.
The firm's weighted average cost of capital is 15%, and it has $1,530,000
of debt at market value and $310,000 ofpreferred stock in terms of market value. The estimated free cash flows over the next 5 years,2020
through2024, are given in the table,
Beyond 2024 to infinity, the firm expects its free cash flow to grow by 4% annually.
of debt at market value and $310,000 of
through2024, are given in the table,
Year (t) Free cash flow(FCF)
2020 $230,000
2021 $310,000
2022 $340,000
2023 $370,000
2024 $420,000
a.Estimate the value of Nabor Industries' entire company by using the free cash flow valuation model.
b.Use your finding in part a, along with the data provided above, to find Nabor Industries' common stock value.
c.If the firm plans to issue 200,000
shares of common stock, what is its estimated value per share?
shares of common stock, what is its estimated value per share?
I need all parts answered
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