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'
Posted: Sat Mar 19, 2022 5:58 pm
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.
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.