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...
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 12%, and it has
$1,970,000 of debt at market value...
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"?
A- Offering goods and services to the public
B- Selling stock to the public in the primary market
C- Public speaking
D- Revealing corporate secrets to the public
JK Manufacturing is considering a new product and is unsure about its price as well as...
JK Manufacturing is considering a new product and is unsure
about its price as well as the variable cost associated with it.
JK's marketing department believes that the firm can sell the
product for $500 per unit, but feels that if the initial market
response is weak, the price may have to be 20% lower in order to be
competitive with existing products. The firm's best estimates of
its costs are fixed coists of $3.6 million and variable cost of...
The owners of CSC Inc., a privately held company, are considering a public offering of the...
The owners of CSC Inc., a privately held company, are
considering a public offering of the company’s common stock as a
means of acquiring additional funds. Prior to making a decision
about a public offering, the owners want to have a lengthy
conversation with you, CSC’s chief financial officer. You have
already informed the owners of the reporting requirements of the
Securities and Exchange Commission, including the necessity for
audited financial statements. Now the owners wish to discuss with
you...
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