BOX Inc. earned $4.55 per share last year. The firm had capital expenditures of $1.75 per share and depreciation expense of $1.05. BOX Inc. has a target debt ratio of 0.25.
High-Growth Period
Transitional Period
Stable-Growth Period
Duration
2 Years
5 Years
Earnings growth rate
45%
Will decline 8% per year to 5% in the stable-growth period
5%
Growth in Capital Expenditures
30%
Increases by 8% per year
Same as Depreciation
Growth in Depreciation
30%
Increases by 13% per year
Same as Capital Expenditures
Change in Working Capital
Given Below
Given Below
$2.25 per share in Year 8
Shareholder Required Return
25%
15%
10%
Yr 0
Yr 1
Yr 2
Yr 3
Yr 4
Yr 5
Yr 6
Yr 7
EPS
4.55
6.60
9.57
13.11
16.91
20.46
23.12
24.27
Capital Expenditures
1.75
2.28
2.96
3.19
3.45
3.73
4.02
4.35
Depreciation
1.05
1.37
1.77
2.01
2.27
2.56
2.89
3.27
Change in WC
0.90
1.10
1.40
1.60
1.80
2.00
2.20
2.10
FCFE
7.63
11.01
14.67
18.08
20.62
21.89
In year 1, what is the free cashflow to equity (FCFE) for BOX Inc.? A. $5.09. B. $6.10. C. $3.35.
