Fast Mawar Bhd is a company that manufactures box mowers. It had net income of $ $15$ million on revenues of $ $50$ million last year, after depreciation charges of $ $10$ million. Capital expenditures last year amounted to $ $16$ million and total non$-$cash working capital was $ $10$ million. The firm had a cash balance of $ $15$ million and paid $50\%$ of its earnings as dividends last year. There is no debt outstanding.

Assuming that revenues, capital expenditures and depreciation grow $10\%$ a year and that net income grows $12\%$ 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.

$(7$ marks $)$

What proportion of earnings will Fast Mawar have to be pay out as dividends if the firm wants to to preserve its existing cash balance of $ $15$ million at the end of $4$ years?

$(7$ marks $)$

Assuming that Fast Mawar does not want to issue new shares 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 $ $30$ million at the end of the fourth year.

$(6$ marks $)(20$ marks $)$