can you solve it with a calculator step by step. im getting wrong with the expon
ID: 2616228 • Letter: C
Question
can you solve it with a calculator step by step. im getting wrong with the exponents.
Summer 2018 (FINC-3301-820/821) Principles of Financial Mgmt Lissel Caramantin | 6/18/18 11:26 AM Homework: Chapter 7 - Homework Save core: 13.33 of 20 pts 4 5 of 9 (9 complete) HW Score: 93.65%, 98.33 of 105pt P7-16 (similar to) i uestion Help Free cash flow valuation Nabor Industries is considering going public but is unsure of a fair offering price of the firm's common slock value T The firm's weghted aver for the the valuation using the free cash low valuation model and $340,000 of preterred company Belore hiring an investment banker to assist in making the pubic offering, managers at Nabor have decided to make thes own estimate he firm's CFO has gathered data tor performing al is 15% and il has $1.700,000 ol debt at market value stock at its assumed market value The estimated tree cash flows over the next 5 years, 2016 through 2020 are given in the table, Beyond 2020 to ninty, the firm expects its tree cash now lo grow by 5% annually a. Estimate the value of Nabor Industries entire company by using the free cash fnow valu b. Use your finding in parl a, along with the data provide c. if the firm plans to issue 200,000 shares of common stock, what is ts estimated d above, to find Nabor Industries' common stock value a. The value of Nabor industres' entire company is $ d to tha nearest dollar)Data Table (Click on the scon located on the top-right comer of the data table below in order lo copy its contents into a spreadsheet) Year ( Free cash flow IFCA $200,000 3280,000 $350,000 $380,000 $450,000 2017 2020 Print Done Enter your answer in the answer box and then cick Check Answer Clear All O Type here to searchExplanation / Answer
a).
2016: PV of FCF1 = 200,000/1.151 = $173,913.04
2017: PV of FCF2 = 280,000/1.152 = $211,720.23
2018: PV of FCF3 = 350,000/1.153 = $230,130.68
2019: PV of FCF4 = 380,000/1.154 = $217,266.23
2020: PV of FCF5 = 450,000/1.155 = $223,729.53
Total (2016-2020) =$1,056,759.716
After 2017: V = [FCF5×(1+g)]/[WACC?g] = 450,000×(1.05)/(0.13 ? 0.04) = $5,250,000,
PV = 5,250,000 / 1.135 = $2,610,177.86
Vop = $1,056,759.716 + $2,610,177.86 = $3,666,937.576
b). Nabor Industries’ common stock value = $3,666,937.576 - $1,700,000 - $340,000 = $1,626,937.58
c). Estimated value per share = $1,626,937.58 / 200,000 = $8.135
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.