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 22% 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

40%) will be $60 million and that investmentin plant and networking capitalwill be $28 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 companys equity