Question
In: Finance
Nabor Industries is considering going public but is unsure of afair offering price for the...
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 the public offering, managers at Nabor ave 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 11% and it has $3,870,000 of debt and $770,000 of preferred stock in terms of market value. The estimated free cash flows over the next five years, 2020 through 2024. Beyond 2024to infinity, the firm expects its free cash flow to grow by 6% annually.
| Year (t) | Free cash flow (FCF) |
2020 | $290,000 |
2021 | $360,000 |
2022 | $400,000 |
2023 | $460,000 |
2024 | $500,000 |
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?
Solutions
jeff jeffy answered 2 years agoRelated Solutions
Nabor Industries is considering going public but is unsure of a fair offering price for the...
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
$1,830,000 of debt at market...
Nabor Industries is considering going public but is unsure of a fair offering price for the...
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 13%, and it has $2,190,000 of
debt at market value...
Nabor Industries is considering going public but is unsure of a fair offering price for the...
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 publicoffering, 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
11 %11%,
and it has
$ 3 comma 360 comma 000$3,360,000...
Brees Industries is considering going public but is unsure of a fair offering price for the...
Brees 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 Brees
have decided to make their own estimate of the firm’s common stock
value. The firm’s CFO has gathered data for performing the
valuating using the free cash flow valuation model. The firm’s
weighted average cost of capital is 10%, and it has $800,000 of
debt at market value...
Free cash flow valuation Nabor Industries is considering going public but is unsure of a fair...
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
valuation model.
The firm's weighted average cost of capital is
13 %
and it has
$2,480,000...
Free cash flow valuation Nabor Industries is considering going public but is unsure of a fair...
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
valuation model.
The firm's weighted average cost of capital is
13 %
and it has
$2,480,000...
What is involved in "going public"? A- Offering goods and services to the public B- Selling...
What is involved in "going public"?
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B- Selling stock to the public in the primary market
C- Public speaking
D- Revealing corporate secrets to the public
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