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 $36\%$ 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 $13\%.$ The company is forecasting that

next year's operating cash flow $($depreciation plus profit after tax at $21\%)$ will be $$74$ million and that investment in plant and

net working capital will be $$36$ million. Thereafter, operating cash flows and investment expenditures are forecast to grow

in perpetuity by $4\%$ a year.

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. Enter your answers in dollars rounded to $2$

decimal places.

Answer is complete but not entirely correct.