Question: 2. Adding growth to the model Aa Aa Tucci Co. has a value of $40 million. Strong is otherwise identical to Tucci Co., but has

 2. Adding growth to the model Aa Aa Tucci Co. has

2. Adding growth to the model Aa Aa Tucci Co. has a value of $40 million. Strong is otherwise identical to Tucci Co., but has $16 million in debt. Suppose that both firms are growing at a rate of 7%, the corporate tax rate is 35%, the cost of debt is 6%, and Tucci's cost of equity is 15% (assume rsu is the appropriate discount rate for the tax shield). Use the Modigliani and Miller theory extension for growth to complete the following table: Strong Co. Tucci Co. $40 million Value of the firm Value of the stock Cost of equity $40 million 15%

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