Cool Cargo Corporation is considering going public. Managers want to estimate common stock value. Cool Cargos CFO has collected data for valuation using the free cash flow method as follows

The firms weighted average cost of capital is 11%, and it has $1.5 million of debt at market value, and $500,000 of preferred stock also at market value. The estimated free cash flows over the next 5 years, 2017-2021, are given as follows:

Year Estimated Free Cash Flow

2017 $200,000

2018 $250,000

2019 $310,000

2020 $350,000

2021 $390,000

After 2020, to infinity, the firm expects free cash flow to grow at a rate of 3% per year.

Estimate the value of Cool Cargos entire company using the free cash flow valuation model.

Use your finding in part (a), along with the data provided above, to find Cool Cargos common stock value.

If the firm has 200,000 shares of common stock outstanding, what is its estimated value per common share?

Cool Cargo Corporation is too small to immediately become part of the S&P 500. How are stocks weighted in the S&P 500, and how is this different from the DJIA and NASDAQ 100? Which of the three indices is most representative of the U.S. stock market?

The above Free Cash Flow estimates were based on the 2017 tax code (i.e., before the recent income tax cuts were passed). Describe how you think the new corporate and personal income tax cuts passed by the Trump Administration and Congress effective 2018 will help or hurt Cool Cargo Corporation.