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 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.

2020 $260,000 2021 $300,000 2022 $380,000 2023 $410,000 2024 $480,000

The firm's weighted average cost of capital is

12%,

and it has

$2,680,000

of debt at market value and

$540,000

of preferred stock in terms of market value. The estimated free cash flows over the next 5 years,

2020

through

2024,

are given in the table,

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. Beyond

2024

to infinity, the firm expects its free cash flow to grow by

5%

annually.

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?