Icarus Airlines is proposing to go public, and you have been given the task of estimaing the vlaue of tis equity. Management plans to maintain debt at 32% of the company's present value, and you believe that at this capital strucutre 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 40%) will be $70 million and that investment expenditures will be $32 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? (Do not round intermediate calcualtions. Enter your answer in millions rounded to the nearset whole dollar amount)
total value $____________million
b. what is the value of the company's equity? (Do not round intermediate calculations. Enter your answer in millions rounded to 1decimal place)
company's equity $____________million