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 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 13%, and it has $2,100,000 of debt at market value and $420,000 of preferred stock in terms of market value. The estimated free cash flows over the next 5years, 2020 through 2024, are given in thetable,...

. Beyond 2024 toinfinity, the firm expects its free cash flow to grow by 4% annually.

a.Estimate the value of NaborIndustries' entire company by using the free cash flow valuation model.

b.Use your finding in part a, along with the data providedabove, to find NaborIndustries' common stock value.

c.If the firm plans to issue 200,000 shares of commonstock, what is its estimated value pershare?

TABLE:

free cash flow

2020 $280,000

2021 $330,000

2022 $360,000

2023 $390,000

2024 $470,000