4. If Dell repurchases $500 million of common stock in 1997 and paid its long term debt of $113 million, along with maintaining 50% growth. Overall cash requirement will be increased by:$500 million + $113 million + $778.51 million = $1,391.51 million It will be met partly by short term investment by $591 million. By improving profit margin from 5.41% to 6.6%, the increased contribution will be $524.3 million. The remaining cash flow to be met will be $1,391.51 million - $591 million - $524.3 million = $276.21 million. By improving the cash convention cycle, cash inflow will improve and meets needs: DSI = 31 days, reducing it by 3 days will save carrying costs by 3*1.5*(4,229/365) = $52.15 million. DSO = 43 days, reducing it by 6 days will reduce receivable by 6* 1.5*(5,296/365) = $130.6 million. DPO = 33 days, increasing it by 6 days will improve payable by 6*1.5*(4,229/365) = $104.2 million. The increased cash inflow out of operational improvements will be: $52.15 million + 4130.6 million + $104.2 million = $286.95 million. Because Dell already faced problem with component shortages in 1996, it will not look into reducing its DSI by a large margin.Conclusion: Because $286.95 million (obtained through operational process improvements) along with $591 million (short term investments) and $524.3 million (short term investments)= $1,402.25 million above the required cash flow of $1,391.51 million, Dell will be able to fund its growth of 50% in 1997 after paying long-term debt of $113 million and buying back equities of $500 million.