What is its estimated value per share

Assignment Help Financial Management

Reference no: EM131056665

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 14%, and it has $1,950,000 of debt at market value and $390,000 of preferred stock at its assumed market value. The estimated free cash flows over the next 5 years, 2016 through 2020, are given below. Beyond 2020 to infinity, the firm expects its free cash flow to grow by 3% annually.

Year Estimated Free Cash Flows

2016 260,000

2017 340,000

2018 410,000

2019 490,000

2020 530,000

a. The value of Nabor Industries' entire company is $____________

b. The value of Nabor Industries' common stock is $____________

c. If the firm plans to issue 200,000 shares of common stock, what is its estimated value per share?

Reference no: EM131056665

Questions Cloud

Performs the equivalent of pthread_once() : To keep the implementation simple, you can ignore possibilities such as init() failing or being canceled when first called from a thread (i.e., it is not necessary to devise a scheme whereby, if such an event occurs, the next thread that calls one..

Used by the executives and certain service personnel : LMC is considering purchase of a new company which may have the need to purchase an executive aircraft used by the executives and certain service personnel. The aircraft costs $1,475,000. LMC tax accountants estimate that the value of the aircraft wi..

Minutes on the viewing platform : On average, 30% of the tourists only visit Level 1 and return to the ground, while 70% visit both levels. On a typical day, the average tourist visiting Level 1 spends 15 minutes on the viewing platform, while the average tourist visiting Level 2..

Write a program that uses sched_setaffinity() : If you have access to a multiprocessor system, write a program that uses sched_setaffinity() to demonstrate this effect, by forcing the processes either onto the same CPUs or onto different CPUs. (Chapter 44 describes the use of pipes.)

What is its estimated value per share : 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 c..

Should portfolio be invested actively using a mixture of two : Should the portfolio be invested actively, passively or using a mixture of the two? (As part of your answer, include definitions of active and passive and examples of each.)

What are the typical financial costs of an erp system : CIS3700 Information Technology for Management Assignment. What are the typical financial costs of an ERP system? Based on the text, what are the activities behind these costs (data conversion, training, etc.)? Why do companies attempt to impleme..

Value-added industries-what is the net present value : You are the CEO of Value-Added Industries, Inc. (VAI). Your firm has 10,000 shares of common stock outstanding, and the current price of the stock is $100 per share. What is the net present value of this project? How many shares of common stock must ..

Determine optimal values of decision variables : Solve the following problem using graphical linear programming and answer the questions that follow. Use the simultaneous equations to determine the optimal values of the decision variables.

User Account

All Pages