Cart Mowers Bhd, manufactures lawn mowers. It had Profit after tax of $ 150 million on revenues of $ 500 rated to $160ation charges of $ 100 million. Capital expenditures last y and total non-cash working capital was $ 100 million. The firm had a cash balance of $ 150 million and paid 50% of its earnings as dividends last year. There is no debt outstanding

a. Assuming that revenues, capital expenditures and depreciation grow at 10% a year and that net income grows at 12% a year for the next four years, and that the non-cash working capital as a percent of revenues does not change over this period, estimate the cash balance at the end of year 4, if the company maintains its current payout ratio and borrows no money.

b. What proportion of earnings will Cart Mowers have to pay out as dividends if the firm wants to preserve its existing cash balance of $150 million at the end of 4 years?

c. Assuming that Cart Mowers does not want to issue new share and wants to maintain its existing payout ratio of 50% what debt ratio will the firm have to utilize over the next four years, to have a cash balance of $ 300 million at the end of the fourth year.