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

  Impact of the global economic crisis on business environment

This paper reviews the article of ‘the impact of the global economic crisis on the business environment' that is written by Roman & Sargu (2011).

  Explain the short and the long-run effects on real output

Explain the short and the long-run effects on real output, price, and unemployment

  Examine the requirements for measuring assets

Examine the needs for measuring assets at fair value in accounting standards

  Financial analysis report driven by rigorous ratio analysis

Financial analysis report driven by rigorous ratio analysis

  Calculate the value of the merged company

Calculate the value of the merged company, the gains (losses) to each group of shareholders, NPV of the deal under different payment methods. Synergy remains the same regardless of payment method.

  Stock market project

Select five companies for the purpose of tracking the stock market, preparing research on the companies, and preparing company reports.

  Write paper on financial analysis and business analysis

Write paper on financial analysis and business analysis

  Intermediate finance

Presence of the taxes increase or decrease the value of the firm

  Average price-earnings ratio

What is the value per share of the company's stock

  Determine the financial consequences

Show by calculation the net present value for the three alternatives (no education, network design certification, mba). Also, according to NPV suggest which alternative you advise your friend to choose

  Prepare a spread sheet model

Prepare a spread sheet model for the client that determines NPV/IRR with and without tax.

  Principles and tools for financial decision-making

Principles and tools for financial decision-making. Analyse the concept of corporate capital structure and compute cost of capital.

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