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 $35\%$ of the company's present value, and you believe that at this capital structure the company's debtholders will

demand a return of $5\%$ and stockholders will require $12\%.$ The company is forecasting that next year's operating cash flow

$($depreciation plus profit after tax at $21\%)$ will be $$73$ million and that investment in plant and net working capital will be $$35$ 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.

a$.$ Total value

b$.$ Company's equity