Restex has a debt-equity ratio of 0.64, an equity cost of
capital of 15%, and a debt cost of capital of 11%. Restex's
corporate tax rate is 21%, and its market capitalization is $238
million.
a. If Restex's free cash flow is expected to be $16
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.
Restex has a debt-equity ratio of 0.64, an equity cost of capital of 15%, and a debt cost of capital of 11%. Restex'
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answerhappygod
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