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You need to estimate the value of Laputa Aviation. You have the following forecasts (in...

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Finance

You need to estimate the value of Laputa Aviation. You have the following forecasts (in millions of dollars) of its profits and of its future investments in new plant and working capital:

Year
1 2 3 4
Earnings before interest, taxes, depreciation, and amortization (EBITDA) $ 72 $ 92 $ 107 $ 112
Depreciation 12 22 27 32
Pretax profit 60 70 80 80
Tax at 40% 24 28 32 32
Investment 20 23 26 28

From year 5 onward, EBITDA, depreciation, and investment are expected to remain unchanged at year-4 levels. Laputa is financed 40% by equity and 60% by debt. Its cost of equity is 19%, its debt yields 10%, and it pays corporate tax at 40%.

a. Estimate the companys total value. (Do not round intermediate calculations. Enter your answer in millions rounded to the nearest whole amount.)

b. What is the value of Laputas equity? (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.)

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