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 33% of the company's present value, and you believe that at this capital structure the company's debtholders will demand a return of 7% and stockholders will require 14%. The company is forecasting that next year's operating cash flow (depreciation ptus profit
after tax at 40%] will be $?1 million and that investment expenditures will be $33 million. Thereafter, operating cash ?ows and investment expenditures are forecast to grow in perpetuity by 4% a year.