Information from the financial statements of ABC Co. is provided in the table below. All the figures are in ($ millions):

a. Estimate the free cash flows to equity in 2018 and 2019 if the capital expenditure undertaken by ABC Co. in 2018 was $120 million and in 2019 was $150 million. In 2017 working capital was $200 million.

b. Describe how ABC Co. would be able to normalise infrequent capital expenditure and unstable changes in working capital. Please also explain why infrequent capital expenditure and unstable changes in working capital occur.

c. Explain three reasons why the capital expenditure of a company is often understated.

Please show your equations and workings, a detailed answer will have Thumbs Up for sure.

December 2019 $1,250 December 2018 $950 Sales Operating Expenses -$655 -$459 Depreciation -$55 -$55 EBIT $540 $44 Interest $0 $0 Taxes Net Income Working Capital -$160.5 $374.5 $320 -$131.7 $307.3 $250