NoLone, an all equity manufacturing firm, has net income of$100million currently and expects this number to grow at 10% a year for the next three years. The firm’s working capital increased by $10 million this year and is expected to increase by the same dollar amount each of the next three years. The depreciation is $50 million and is expected to grow 8% a year for the next three years. Finally, the firm plans to invest $60 million in capital expenditure for each of the next three years. The firm pays 60% of its earnings as dividends each year.
NoLone has a cash balance currently of $50 million. Assuming that the cash does not earn any interest, how much would you expect to have as a cash balance at the end of the third year?