What is its estimated value per share

Assignment Help Corporate Finance
Reference no: EM132210521

Question - 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 11%, and it has $1,500,000 of debt and $400,000 of preferred stock in terms of market value. The estimated free cash flows over the next 5 years, 2020 through 2024, are given below. Beyond 2024 to infinity, the firm expects its free cash flow to grow by 3% annually.

Year (t)

Free cash flow (FCFt)

2016

$200,000

2017

250,000

2018

310,000

2019

350,000

2020

390,000

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?

Reference no: EM132210521

Questions Cloud

Write a program to process a weighted undirected graph : Set up and print the adjacency matrix representation of the Graph. Determine whether the graph is connected.
Write a program that prompts for and reads numbers : Write a program that prompts for and reads numbers into an array. The array should be big enough to hold 20 numbers.
Write a program that prints the numbers 1 to n to stdout : Write a program that prints the numbers 1 to n to stdout where n is the first command line argument.
Write a program that will populate a queue with post-fix : Calculate values using the algorithm mentioned above and in the slides for addition, subtraction, multiplication, and division.
What is its estimated value per share : The firm's weighted average cost of capital is 11%, If the firm plans to issue 200,000 shares of common stock, what is its estimated value per share
Perform the a search and apply that program to the problem : You are to write a program that performs the A* search and apply that program to the problem described
Write a program to print the following table : Write a program to print the following table. Each row in the table has an integer, its square, its cube, and then its square root to 2 decimal places.
Write a program which prompts a user for 5 2-d : Write a program which prompts a user for 5 2-D (x,y) coordinates and writes them to a file "points.txt", one point (x,y) coordinate pair per line.
Case study - local area network design : Detail explanation of the planning and designing of network. It is recommended that bullet points are included whenever necessary

Reviews

Write a Review

Corporate Finance Questions & Answers

  Find what was the firms economic val added

How much value did management add to stockholders' wealth during 2012 - What was the firms Economic Val Added

  Compute and compare the inventory turnover ratios

You will suppose role of a financial analyst and develop full analysis between Coca-Cola and Pepsi Corporation & also explain all computations & ensure that you answer each and every question thoroughly.

  Prepare a memo that can be given to incoming employees

Prepare a memo that can be given to incoming employees explaining to them the importance of control environment in general and control activities specifically.

  Complete analysis of dudleys primary and secondary audiences

Complete an analysis of Dudley's primary and secondary audiences for the speech-business leaders and the public-and then discuss your assessment in small groups.

  Determine a bonds value is to utilize a financial calculator

The easiest way to determine a bond's value is to utilize a financial calculator, and input the values for N, I/Y, FV, PMT, and calculating for PV.

  What capabilities and competencies does the usps have

What capabilities and competencies does the USPS have that would enable it to create economic value by offering financial services?

  You have observed the following returns over timeyear stock

you have observed the following returns over timeyear stock x stock y market 2006 14 13 12 2007 19 7 10 2008 16 5 12

  Goal of maximizing value of stock conflict with other goals

Can the goal of maximizing the value of the stock conflict with other goals such as avoiding unethical or illegal behavior? In particular, do subjects like customer and employee safety, the environment and the general good of society fit in this f..

  How long would annual payments

How many years would it take to have $50,000 for a home down payment if the first payment is made at the end of the upcoming year (year 1)?

  What is the beta coefficient for concordia

What is the Beta coefficient for Concordia? Explain your answers. What is Concordia's required rate of return on any new investments? Explain your answers.

  Determination of source of funds for decision

determination of source of funds for decision making.mckinsee inc. is developing a plan to finance its asset base. the

  Prepare a three years financial projection on anthem inc

Prepare a three Years Financial Projection on Anthem Inc (Health Insurance Company). For Milestone, you need to make 3-year projection of the target company's income statement (P&L). Here is an example of a full-blown P&L.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd