p. 400 Valuation of IPO 15-2. Terence Mann is considering buying some shares of common stock of an initial public offering by NewAge Communications Corporation. The privately held company is going public by issuing 2 million new shares at $20 per share. Terence gathered the following information about NewAge: Total assets: $ 200 million (historical cost) Total liabilities: $ 150 million (market value) Number of shares retained by pre-IPO owners outstanding $ 3 million (5 million shares after IPO) > Estimated liquidation value: $ 250 million Estimated replacement value of assets: $ 400 million Expected dividend in one year: $ 2 per share Expected dividend growth rate: 8% > The required rate of return for Terence from a share of common stock for this type of company is 13 percent. Compare the selling price of the stock with its value as obtained from different valuation methods. Would you recommend that Terence buy the stock