Gemco Jewelers earned $5 million in after-tax operating income in the most recent year. The firm also had capital expenditures of $4 million and depreciation of $2 million during the year, and the noncash working capital at the end of the year was $10 million.
a. Assuming that the firm’s operating income will grow 20 percent next year, and that all other items (capital expenditures, depreciation, and noncash working capital) will grow at the same rate, estimate the FCFF next year.