Question: In 2 0 1 7 , BMC Software generated $ 4 6 5 M of operating income ( earnings before interest and taxes ) and

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
$434.62M
$375.50M
$423.30M
$474.62M

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