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Restex has a debt-equity ratio of 0.74, an equity cost of capital of 12%, and a debt cost of capital of 8%. Restex's corporate tax
Restex has a debt-equity ratio of 0.74, an equity cost of capital of 12%, and a debt cost of capital of 8%. Restex's corporate tax rate is 21%, and its market capitalization is $269 million. a. If Restex's free cash flow is expected to be $8 million one year from now and will grow at a constant rate, what expected future growth rate is consistent with Restex's current market value? b. Estimate the value of Restex's interest tax shield. a. If Restex's free cash flow is expected to be $8 million one year from now and will grow at a constant rate, what expected future growth rate is consistent with Restex's current market value? If Restex's free cash flow is expected to be $8 million in one year, the expected future growth rate is 8.94 %. (Round to two decimal places.)
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