You are trying to estimate the fundamental growth in earnings for Janus Enterprises for the next 5 years and have obtained the following information:

In the most recent year, Janus reported operating income of $100 million on book capital invested (at the beginning of the period) of $800 million. The firm faced a tax rate of 40% during the period.

The firm also reported capital expenditures of $140 million and depreciation of $ 100 million in the most recent year. Non-cash working capital increased by $10 million during the year.

a)Estimate the after-tax return on capital last year for Janus.

b)Estimate the expected growth rate for the next 5 years for Janus, assuming that the return on capital and reinvestment rate remain unchanged.

c)Now assume that Janus will improve its return on capital on new investments for the next 5 years to 15% while the return on capital on existing investments will remain at current levels. Estimate the expected annual growth rate over the 5 years.