0% Plagiarism Guaranteed & Custom Written

Using the free cash flow valuation model to price an IPO Assume

01 / 10 / 2021 Assignment

This paper circulates around the core theme of Using the free cash flow valuation model to price an IPO Assume together with its essential aspects. It has been reviewed and purchased by the majority of students thus, this paper is rated 4.8 out of 5 points by the students. In addition to this, the price of this paper commences from £ 99. To get this paper written from the scratch, order this assignment now. 100% confidential, 100% plagiarism-free.

Using the free cash flow valuation model to price an IPO Assume that you have an opportunity to buy the stock of Cool Tech, 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 developed from a variety of data sources. The key values you have compiled are summarized in the following table.

Free cash flow

Year (t)


Other data



Growth rate of FCF, beyond 2013 to infinity 2%



Weighted average cost of capital = 8%



Market value of all debt = $2,700,000



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 Cool Tech’s common stock value per share.

b. Judging on the basis of 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 2016 will be 3% rather than 2%. What effect would this finding have on your responses in parts a and b?

International House, 12 Constance Street, London, United Kingdom,
E16 2DQ

Company # 11483120

Benefits You Get

  • Free Turnitin Report
  • Unlimited Revisions
  • Installment Plan
  • 24/7 Customer Support
  • Plagiarism Free Guarantee
  • 100% Confidentiality
  • 100% Satisfaction Guarantee
  • 100% Money-Back Guarantee
  • On-Time Delivery Guarantee
FLAT 50% OFF ON EVERY ORDER. Use "FLAT50" as your promo code during checkout