Using the free cash flow valuation model to price an IPOPersonal Finance ProblemAssume that you have an opportunity to buy the stock of CoolTech, Inc., an IPO being offered for $4.49 per share. Although you are very much interested in owning thecompany, 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 thatyou'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			Other data
2020	$720,000			Growth rate of FCF, beyond 2023 to infinity=3%
2021	$830,000			Weighted average cost of capital=12%
2022	$920,000			Market value of all debt=$1,970,000
2023	$1,000,000			Market value of preferred stock=$790,000
				Number of shares of common stock to be issued= 1,100,000

.

a. Use the free cash flow valuation model to estimateCoolTech's common stock value per share.

b.Judging by your finding in part a and the stock's offeringprice, should you buy the stock?

c. On further analysis, you find that the growth rate in FCF beyond 2023 will be 4% rather than 3%.

What effect would this finding have on your responses in parts a and b?

a. The value of CoolTech's entire company is $nothing.

(Round to the nearest dollar.)