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1.In 2017, BMC Software generated $465M of operating income (earnings before interest and taxes) and $295M of net income from $2,200M of sales. Over the next two years (2018 and 2019), the firm is projecting 10% growth in operating income and 5% growth in depreciation expense. Beginning in 2020, BMC estimates that free cash flows will grow 2%. Assume the firms effective tax rate is 30%, weighted average cost of capital is 9%, and number of shares outstanding is 146M. Depreciation expense for 2017 was $105M while capital expenditures were $55M. Capital expenditures are expected to remain constant over the next 5 years. BMC expects working capital needs to increase by $20M per year. Lastly, the firm has $250M in cash and cash equilavents and $750M of interest bearing debt.

What is the free cash flow projection for 2019?

Group of answer choices

a.$434.62M

b.$375.50M

c.$423.30M

d.$474.62M

2.In 2017, BMC Software generated $465M of operating income (earnings before interest and taxes) and $295M of net income from $2,200M of sales. Over the next two years (2018 and 2019), the firm is projecting 10% growth in operating income and 5% growth in depreciation expense. Beginning in 2020, BMC estimates that free cash flows will grow 2%. Assume the firms effective tax rate is 30%, weighted average cost of capital is 9%, and number of shares outstanding is 146M. Depreciation expense for 2017 was $105M while capital expenditures were $55M. Capital expenditures are expected to remain constant over the next 5 years. BMC expects working capital needs to increase by $20M per year. Lastly, the firm has $250M in cash and cash equilavents and $750M of interest bearing debt.

What is the the terminal value today ? TV₂₀₁₉ = FCF₂₀₂₀/(WACC g)

Group of answer choices

a.$6,333.00

b.$5,810.09

c.$4,925.66

d.$4,518.96

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