K Restex has a debt-equity ratio of 0.56, an equity cost of capital of 13%, and a debt cost of capital of 9%. Restex's corporate tax rate is 20%, and its market capitalization is $153 million. a. If Restex's free cash flow is expected to be $4 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 $4 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 $4 million in one year, the expected future growth rate is % (Round to two decimal places) b. Estimate the value of Restex's interest tax shield. Interest tax shield value is $million. (Round to the nearest million.

K Restex has a debt-equity ratio of 0.56, an equity cost of capital of 13%, and a debt cost of capital of 9%. Restex's corporate tax rate is 20%, and its market capitalization is $153 million. a. If Restex's free cash flow is expected to be $4 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 $4 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 $4 million in one year, the expected future growth rate is % (Round to two decimal places) b. Estimate the value of Restex's interest tax shield. Interest tax shield value is $million. (Round to the nearest million.

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter7: Corporate Valuation And Stock Valuation

Section: Chapter Questions

Problem 1P: Ogier Incorporated currently has $800 million in sales, which are projected to grow by 10% in Year 1...

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