Personal Finance Problem you have an opportunity to buy the stock of CoolTech, Inc., an IPO being offered for share. Although you are very much interested in owning the company, vou cerned about whether it is fairly priced. To determine the value of the shaon. have decided to apply the free cash flow valuation model to the firm's finiyou that you've developed from a variety of data sources. The key values piled are summarized in the following table. 5 P7-17 Using the free cash flow valuation model to price an IPO Assume that S0 per you have com Free cash flow Other data Year (t) FCF 2016 $ 700,000 | Growth rate of FCF, beyond 20 19 to infinity = 2% 2017 800,000 | Weighted average cost of capital = 8% 2018 2019 1,100,000 Market value of preferred stock $1,000,000 950,000 | Market value of all debt $2,700,000 Number of shares of common stock outstanding 1,100,000 a. Use the free cash flow valuation model to estimate CooTech's common st b. Judging on the basis of your finding in part a and the stock's offering price, c. On further analysis, you find that the growth rate in FCF beyond 2019 w value per share. should you buy the stock? 3% rather than 2%. What effect would this finding have on your responses m will be parts a and b? sponses in