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Using the tree 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 IP- 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 ca accumulated from a variety of data sources. The kuy values you have compiled are summarized in the following table, a. Use the free cash flow valuation model to estimate Cool Tech's common stock value per share. b. Judging by your finding in part a and the stock's offering price, should you buy the stock? c. On further analysis, you find that the growth rate in FCF beyond 2023 will be 6% rather than 6% What effect would thin finding have on your responses in parts a and COB a. The value of CoolTech's entire company is sl. (Round to the nearest dollar.) Points: 0 of 1 al Finance Problem Assume that you have an opportunity to buy the stock of CoolTech, Inc., an IPO being offered for $19.14 per sharo. Although you are very mether 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 e compiled are summarized in the following table, mmon stock value per share ould you buy the stock? 123 will be 6% rather than 5%. What affect would this finding have on your responses in parte a and b? earest dollar) Points: 0 of 1 sh 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 $19.14 per share. Although you owning the company, you are concomed about whether it la fairly priced. To determine the value of the shares, you have decided to apply the free cash flow valuation model to the fem'a financial data a variety of data sources. The ke - X sh flow valuation model to estima Data table ir finding in parta and the stock's sis, you find that the growth rate (Click on the fron here in order to copy the contents of the datatable below into a spreadsheet.) Free cash flow ol Tech's entire company iss Year (4) FCF Other data 2020 $750,000 Growth rate of FCF, beyond 2023 to infinity 5% 2021 $850,000 Weighted average cost of capital = 9% 2022 $1,000,000 Market value of all debt $4,860,000 2023 $1,150,000 Market value of preferred stock $1,950,000 Number of shares of common stock to be issued = 1,100,000 Print Done ve this View an example Get more help

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