$\frac{?}{{?}_B\text{a}\text{c}\text{k}}$

$19$

Problem $13-24$ Company Valuation $($LO$5)$

Icarus Airlines is proposing to go public, and you have been given the task of estimating the value of its equity. Management plans to maintain debt at $30\%$ of the company's present value, and you believe that at this capital structure the company's debtholders will demand a return of $6\%$ and stockholders will require $11\%.$ The company is forecasting that next year's operating cash flow $($depreciation

$\frac{0}{4}$

plus profit after tax at $21\%)$ will be $$68$ million and that investment in plant and net working capital will be $$30$ million. Thereafter, points operating cash flows and investment expenditures are forecast to grow in perpetuity by $4\%$ a year.

awarded

a$.$ What is the total value of Icarus?

b$.$ What is the value of the company's equity?

Note: For all the requirements, do not round intermediate calculations.

$\backslash$table$[[$a$.$ Total value,$$,719$