1. 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 companys present value, and you believe that at this capital structure the companys debt holders will demand a return of 6% and stockholders will require 11%. The company is forecasting that next years operating cashflows will be $68M and that investment and expenditures will be $30M. Thereafter, operating cashflows and investment expenditures are expected to grow in perpetuity by 4%/year. The company is taxed at 21%.

a. What is the total value of Icarus?

b. What is the value of the companys equity?