I cannot understand why we cannot use the formula $"$PV of Interest Tax Shield $=$ D$*$t$"$ in the following problem.

Restex maintains a debt$-$equity ratio of $0\mathrm{.}85,$ and has an equity cost of capital of $12\%$ and a debt cost of capital of $7\%.$ Restex$$s corporate tax rate is $40\%,$ and its market capitalization is $$220$ million.

a$.$ If Restex$$s free cash flow is expected to be $$10$ million in one year, what constant expected future growth rate is consistent with the firm$$s current market value?

b$.$ Estimate the value of Restex$$s interest tax shield.

The solution provided is on the picture. be $$10$ million in one year, what constant expected

future growth rate is consistent with the firm's current market value?

b$.$ Estimate the value of Restex's interest tax shield.

a$.$

WACC$=\frac{1}{1\mathrm{.}85}12\%+\frac{0\mathrm{.}85}{1\mathrm{.}85}7\%(1-0\mathrm{.}40)=8\mathrm{.}42\%$

$V^L=E+D=2201\mathrm{.}85=407=\frac{FCF}{\text{W}\text{A}\text{C}\text{C}-g}=\frac{10}{0\mathrm{.}0842-g}$

$g=0\mathrm{.}0842-\frac{10}{407}=5\mathrm{.}96\%$

b$.$

pretax WACC $=\frac{1}{1\mathrm{.}85}12\%+\frac{0\mathrm{.}85}{1\mathrm{.}85}7\%=9\mathrm{.}70\%$

$V^U=\frac{FCF}{\text{p}\text{r}\text{e}\text{t}\text{a}\text{x}\text{W}\text{A}\text{C}\text{C}-g}=\frac{10}{0\mathrm{.}0970-0\mathrm{.}0596}=$$$267$ million

$PV($ Interest Tax Shield $)=407-267=$$$140$ million