Using the free cash flow valuation model to price an IPO Personal Finance Problem Assume that you have an opportunity to buy the stock of CoolTech, Inc., an IPO being offered for $9.74 por shareAlthough 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 Tho kuy values you have compiled are summarized in the following table, a. Use the free cash flow valuation model to estimate CoolTech's common stock value por share b. Judging by your finding in part a and the stocks offering price, should you buy the stock c. On further analysis. you find that the growth rate in FCF beyond your 4 will be 0% rather than 5% What effect would this finding have on your responses in nats a Free cash flow Year (t) FCF 1 $660,000 2 $740,000 3 $890,000 4 $1,000,000 Other data Growth rate of FCF, beyond year 4 = 5% Weighted average cost of capital = 14% Market value of all debt = $1,850,000 Market value of preferred stock = $740,000 Number of shares of common stock outstanding = 1,100,000 Print Done