P7-18 Using the free cash fow valuation model to price an IPO Assume that you have an opportunity to buy the stock of CoolTech Inc., an IPO being offered for $12.50 per share. Although you are very much interested in owning the company, you are concerned about whether it is fairly priced. To determine the value of the shares, you have decided to apply the free cash flow valuation model to the firm's financial data that you've accumulated from a variety of data sources. The key values you have compiled are summarized in the following table. Free cash flow Year (t) FCF 2020 $ 700,0 2021 2022950,000 Market value of all debt $2.700,000 2023 Other data Growth rate of PCF, beyond 2023 to infinity-2% 00 800,000 Weighted average cost of capital -8% 1,100,000 Market value of preferred stock $1,000,000 Number of shares of common stock outstanding - 1,100,000 a. Use the free cash flow valuation model to estimate CoolTech's common stock value per share. buy the stock? be 3% rather than 2%. What effect would this finding have on your b. Judging by your finding in part a and the stock's offering price, should you c. On further analysis, you find that the growth rate of FCF beyond 2023 will responses in parts and b