Reference no: EM132070194

You have been provided the following information on CEL Inc, a manufacturer of high- end stereo systems.

In the most recent year, which was a bad one, the company made only $ 40 million in net income. It expects next year to be more normal. The book value of equity at the company is $1 billion, and the average return on equity over the previous 10 years (assumed to be a normal period) was 10%.

The company expects to make $80 million in new capital expenditures next year. It expects depreciation, which was $60 million this year, to grow 10% next year.

The company had revenues of $1.5 billion this year, and it maintained a non-cash working capital investment of 10% of revenues. It expects revenues to increase 20% next year and working capital to decline to 9.5% of revenues.

The firm expects to maintain its existing debt policy (in market value terms). The market value of equity is $ 1.5 billion and the book value of equity is 500 million. The debt outstanding (in both book and market terms) is $500 million.

Estimate the Free Cash Flow to Equity (FCFE) next year.

Input your answer as dollars in millions or dollar actual.