Rapidly expanding into new markets-find the free cash flows

Assignment Help Financial Management

Reference no: EM131832573

Texas Roadhouse (TXRH) is rapidly expanding into new markets and had sales of $1,807M in 2015. Suppose you expect sales to grow at a 15% rate in 2016, but this rate will slow by 2% per year to a long-run growth rate for the restaurant industry of 5% by 2021. You expect EBIT to be 9% of sales, increases in net working capital requirements to be 5% of any increase in sales, and net investment (capital expenditures in excess of depreciation) to be 25% of any increase in sales.

TXRH has $59M in cash, $525M in debt ($26M conventional debt plus $499M operating leases), 70M shares outstanding, a tax rate of 37%, and a weighted average cost of capital of 8%.

a. Using a spreadsheet, find the free cash flows for 2016-2021. (Hint: the 2021 FCF is $135.4M)

Reference no: EM131832573

Questions Cloud

Advantages of the technologies recommending for client : Be thorough in your web research to ensure you sample a broad spectrum of available wearable solutions. Present the advantages of the technologies.

Calculate the npv of the new project line : Suppose that Antel uses a weighted average cost of capital of10 % as a benchmark for its new chip projects. Calculate the NPV of the new project line

Determining the posterior distribution : Suppose that the proportion () of defective items in a large shipment is unknown, and that the prior distribution of () is a beta distribution.

Create the flexible budget and static budget : Dog-Gone Haven is reviewing their budget for the current year. Create the flexible budget and static budget

Rapidly expanding into new markets-find the free cash flows : Texas Roadhouse (TXRH) is rapidly expanding into new markets and had sales of $1,807M in 2015. find the free cash flows

What type of test would be used : Records from previous years indicate an average bridge repair costwas $35,003. Use the sample data to test that the 1993 mean µ isgreater than $35,003.

Denote the average number of defects : Let 8 denote the average number of defects per ] 00 feet of a certain type of magnetic tape. Suppose that the value of 0 is unknown

Creating a flyer advertising a fundraising event : For this project, pretend you are an organizer for a charity in your local area. The Charity can be a real or pretend charity.

Standard deviation of the posterior distribution : Show that no matter how large the standard deviation of the prior distribution is, the standard deviation of the posterior distribution will be less than 1/5.

User Account

All Pages