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
Free cash flow valuationNabor 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 thefirm's common stock value. Thefirm's CFO has gathered data for performing the valuation using the free cash flow valuation model.
Thefirm's weighted average cost of capital is 14%, and it has $1,720,000 of debt at market value and $340,000 of preferred stock in terms of market value. The estimated free cash flows over the next 5years, 1 through 5, are given in thetable,
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