Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. icarus airlines is proposing to go public, and you

Icarus Airlines is proposing to go public, and you have been given the task of...

80.2K

Verified Solution

Question

Finance

image

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 27% 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 $65 million and that investment in plant and net working capital will be $27 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

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Statistics
1.2K views

suppose you will perform a test to determine whether there is sufficient evidence to support a...

Operations Management
1.2K views

6. If the items on an assessment method appear to show that a high score on...

Basic Math
1.2K views

transcript Indigo Depot is having a clearance sale of their summer items All clearance items...

Basic Math
1.2K views

A pizza parlor offers a choice of 12 differenttoppings. How many 5-topping pizzas are possible?(no...

Basic Math
1.2K views

Without graphing, determine whether the equation has a graph that is symmetric with respect to...

Calculus
1.2K views

Consider the differential equation 4y 4y y 0 ex 2 xex 2 Verify that the...

Calculus
1.2K views

a log4 log 10 000 log 32 4 marks

Algebra
1.2K views

Maria deposited 4000 into an account with 5 5 interest compounded quarterly Assuming that no...

Accounting
1.2K views

help Cash Accounts receivable Equipment, net Land Total assets Current Year...

Accounting
1.2K views

The ending bank statement balance at November 30 is $7,050. The bank statement shows a...

Accounting
1.2K views

Waupaca Company establishes a $330 petty cash fund on September 9. On September 30, the...

Accounting
1.2K views

I need help filling in the yellow cells shown in photo. Background: I...