Remex$($RMX$)$ currently has no debt in its capital structure. The beta of its equity is

$1\mathrm{.}44.$

For each year into the indefinite$$ future, Remex's free cash flow is expected to equal

$$$$26$

million. Remex is considering changing its capital structure by issuing debt and using the proceeds to buy back stock. It will do so in such a way that it will have a

$25\%$

$$debt$-$equity ratio after the$$ change, and it will maintain this$$ debt$-$equity ratio forever. Assume that$$ Remex's debt cost of capital will be

$6\mathrm{.}37\%.$

Remex faces a corporate tax rate of

$15\%.$

Except for the corporate tax rate of

$15\%,$

there are no market imperfections. Assume that the CAPM$$ holds, the$$ risk$-$free rate of interest is

$4\mathrm{.}9\%,$

and the expected return on the market is

$10\mathrm{.}78\%.$

a$.$ Using the information$$ provided, fill in the table below.

b$.$ Using the information provided and your calculations in part

$($a$),$

determine the value of the tax shield acquired by Remex if it changes its capital structure in the way it is considering.

Question content area bottom

Part $1$

a$.$ Using the information$$ provided, fill in the table below.

Using the information provided$$ above, fill in the table$$ below:$($Round to three decimal$$ places.$)$

$$Debt$-$Equity Ratio

Debt Cost of Capital

Equity Cost of Capital

Weighted Average Cost of Capital

Before change in capital structure

$0$

$$N$/$A

enter your response here$\%$

enter your response here$\%$

After change in capital structure

$0\mathrm{.}25$

$6\mathrm{.}37\%$

enter your response here$\%$

enter your response here$\%$