1. 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)