Question
Freecashflowvaluation.NaborIndustriesisconsideringgoingpublicbutisunsureofafairofferingpriceforthe company.Beforehiringaninvestmentbankertoassistinmakingthepublic offering,managersatNaborhavedecidedto maketheirownestimateofthefirm'scommonstockvalue.Thefirm'sCFOhasgathereddataforperformingthevaluation usingthefreecashflowvaluationmodel. Thefirm'sweightedaveragecostofcapitalis 14% ,andithas $2,050,000 of debt at market value and $410,000 of preferredstockatitsassumedmarketvalue.Theestimatedfreecashflowsoverthenext5years,2016through2020,are giveninthetable, . Beyond2020toinfinity,thefirmexpectsitsfreecashflowtogrowby 4% annually
Freecashflowvaluation.NaborIndustriesisconsideringgoingpublicbutisunsureofafairofferingpriceforthe company.Beforehiringaninvestmentbankertoassistinmakingthepublic offering,managersatNaborhavedecidedto maketheirownestimateofthefirm'scommonstockvalue.Thefirm'sCFOhasgathereddataforperformingthevaluation usingthefreecashflowvaluationmodel. Thefirm'sweightedaveragecostofcapitalis 14% ,andithas $2,050,000 of debt at market value and $410,000 of preferredstockatitsassumedmarketvalue.Theestimatedfreecashflowsoverthenext5years,2016through2020,are giveninthetable, . Beyond2020toinfinity,thefirmexpectsitsfreecashflowtogrowby 4% annually
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