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You have been provided with three years of historical data for Tandem computers, a firm that has paid dividends. 1996 1997 1998 Net Income $150

You have been provided with three years of historical data for Tandem computers, a firm that has paid dividends.

1996

1997

1998

Net Income

$150

$225

$315

Capital Expenditures

$200

$250

$300

Depreciation

$125

$190

$250

Non-Cash Working Capital

$300

$330

$375

The firm started 1996 with a cash balance of $100 million, and raised 10% of its external financing needs from debt. The non-cash working capital in 1995 was $275 million. Each year the company pays out 20% of its net income as dividends.

Assuming that the firm did not buy back any stock over the period, estimate how much cash the firm would have at the end of 1998. (Assume that cash balances earn no interest and that the firm will continue to raise 10% of its external financing needs from debt)

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