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Category > Accounting Posted 26 Apr 2017 My Price 5.00

Icarus Airlines is proposing to go public

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 23% of the companyAc€?cs present value, and you believe that at this capital structure the companyAc€?cs debtholders will demand a return of 5% and stockholders will require 12%. The company is forecasting that next yearAc€?cs operating cash flow (depreciation plus profit after tax at 40%) will be $61 million and that investment expenditures will be $23 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 calculations. Enter your answer in millions rounded to the nearest whole dollar amount.)

 

  Total value

$  million

 

b.

What is the value of the companyAc€?cs equity? (Do not round intermediate calculations. Enter your answer in millions rounded to 1 decimal place.)

 

  CompanyAc€?cs equity

$  million  

 



Answers

Alpha Geek
(8)
Status NEW Posted 26 Apr 2017 10:04 AM My Price 5.00

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Attachments

file 1493201836-Answer.docx preview (171 words )
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