Nabor industries is considering going public but is unsure of a fair offering price for the company. 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 $2,000,000 of debt at market value and $400,000 of preferred stock at its assumed market value. The estimated free cash flow over next 3 years, 2004 through 2006, are given below. Beyond 2006 to infinity, the firm expects its free cash flow to grow by 4% annually.
Year (t) Free Cash Flow (FCF)
2004 $200,000
2005 $300,000
2006 $400,000
Estimate the value of Nabor industries' entire company by using the free cash flow valuation model.
a. $3,666,657.08
b. $3,289,999.80
c. $3,387,777.08
d. $3,287,689.08
e. $3,892,587.08
Answers (1)
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Nabor industries is considering going public but is unsure of a fair offering price for the company. The firm's CFO has gathered data for ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers
You Might be Interested in
How many pounds of garbage does the average american produce each day
Answers (2)
Which characteristic places people at a higher risk for trying illicit drugs?
Answers (1)
Alfonzo's Italian House has 17,000 shares of stock outstanding with a par value of $1 per share and a market price of $24.60 a share. The firm just announced a stock split of three-for-two. What will be the market price per share after the split
Answers (1)
In an emergency situation, why is a drug most commonly delivered via injection versus an oral route?
Answers (1)
Assume Qd=10-2p and Qs=p what is the elasticity of Supply if price increases from $1 to $3? (a) Unit elastic (b) Inelastic (c) Elastic (d) Not enough information is available to answer this question
Answers (1)
New Questions in Business
At a four-way stop, if two cars arrive at the intersection at the same time: A) the larger car has the right of way B) the vehicle on the right yields to the vehicle on the left C) the smaller car has the right of way D) the vehicle on the left
Answers (1)
Suppose we are interested in bidding on a piece of land and we know one other bidder is interested. The seller announced that the highest bid in excess of $10,000 will be accepted.
Answers (1)
Zappos, the online shoe and clothing marketer, promises free shipping and free returns on any of its products, no questions asked. This is an example of how Zappos has a strong competitive advantage through
Answers (1)
Based on the corporate valuation model, the total corporate value of chen lin inc. is $900 million. its balance sheet shows $110 million in notes payable, $90 million in long-term debt, $20 million in preferred stock, $140 million in retained
Answers (1)
Larry's lizards and ronaldo's reptiles are competing pet store franchises. both are considering opening a store in the small town of turtleville.
Answers (1)