Restex maintains a debt-equity ratio of 0.78, has an equity cost of capital of 12%, and a debt cost of capital of 7%. Restex’s corporate tax rate is 38%, and its market capitalization is $258 million.

a. If Restex’s free cash flow is expected to be $11 million in one year, what constant expected future growth rate is consistent with the firm’s current market value?

b. Estimate the value of Restex’s interest tax shield.