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.

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

2. Estimate the reinvestment rate last year for Janus.

3. 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.