Identify how the firm expects its free from cash flow


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 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. The firm's weighted average cost of capital is 11%, and it has $1,500,000 of debt at market value and $400,000 of preferred stock at its assumed market value. The estimated free cash flows over the next 5 years, 2013 through 2017, are given below. Beyond 2017 to infinity, the firm expects its free cash flow to grow by 3% annually. Year Estimated Free Cash Flows 2013 200,000 2014 250,000 2015 310,000 2016 350,000 2017 390,000

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Accounting Basics: Identify how the firm expects its free from cash flow
Reference No:- TGS0711869

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