If you thought hedge fund investor Carl Icahn's proposed $150 billion Apple (NASDAQ:AAPL) share repurchase program was big, try $200 billion on for size. Credit Suisse analyst Kulbinder Garcha thinks Apple should spend that much over the next three years on stock buybacks and dividends. Despite how wild this might first seem, it's actually quite reasonable when you take a closer look.

Putting a $200 billion program in perspective
Apple's board of directors has authorized a total of $130 billion to be returned to shareholders through repurchases and dividends. Of that amount, $90 billion is reportedly to be directed toward stock buybacks, of which $68 billion has already been spent ($45 billion in the past year alone).

With only $22 billion remaining for repurchases, and with Apple consistently providing updates in March or April on its effort to return cash to shareholders since the program began in 2012, the next update is likely just around the corner.

But could Apple afford to return $200 billion to shareholders in just three years? The reasoning is, well, reasonable.

"If Apple does not increase its cash return program to $200 billion, then the net cash would stand at $184 billion by the end of 2016, which means Apple would have nearly double the amount of net cash on hand compared to the end of 2012," Garcha said in a note to investors (via CNBC). "This is clearly excessive and significantly higher than when the company first implemented their cash return program at the end of 2012." Furthermore, Garcha noted that this level of cash "would be very difficult for Apple's management to justify."

Garcha said he imagines $165 billion of the authorized cash used for repurchases and $37 billion for dividends.

Even if Apple came through with such a significant boost to its investor return program, Garcha estimated the company would still end 2016 with $114 billion in net cash -- a figure equal to about 18% of Apple's current $647 billion market capitalization. How would Apple have so much cash after spending so much cash? We have the company's $50 billion in annual free cash flow, or cash from operating activities minus capital expenditures (investments in future growth opportunities, acquisitions, etc.), to thank for that.

The majority of Apple's $50 billion in annual free cash flow stems from its wildly profitable iPhone sales. Image source: Apple.

Apple's hefty cash flow and its impossible-to-ignore cash hoard are among the reasons Garcha is bullish on the stock, with a 12-month price target of $130, up about 18% from today's price.

Since only a fraction of Apple's cash -- about $18 billion -- is held domestically, and only a fraction of its annual free cash inflow is domestic, the company would need to issue more debt to fund such a significant program if not repatriating its cash abroad. But given the low rates Apple can secure on its bond offerings, this sort of debt makes sense. So far, Apple's decision to take on debt has absolutely benefited shareholders.

I believe Apple will boost its stock buyback and dividend program in March or April. But will the boost be as big as Garcha imagines? It's certainly possible.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.