Restex has a debt-equity ratio of

0.81

an equity cost of capital of

18 %

and a debt cost of capital of

13 %

Restex's corporate tax rate is

38 %

and its market capitalization is

$ 219

million.

a. If Restex's free cash flow is expected to be

$ 14

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.