$2.$ Adding growth to the model

Markum Co$.$ has a value of $$80$ million. Carter is otherwise identical to Markum Co$.,$ but has $$32$ million in debt. Suppose that both firms are growing at a rate of $7\%,$ the corporate tax rate is $38\%,$ the cost of debt is $8\%,$ and Markum$$s cost of equity is $9\%($assume rsUrsU$$is the appropriate discount rate for the tax shield$).$

Use the Modigliani and Miller theory extension for growth to complete the following table. $($Note: Round all final answers to two decimal places.$)$

Markum Co$.$

Carter Co$.$

Value of the firm$$80$ million$$Value of the stock$$80$ million$$Cost of equity$9\%$ Markum Co$.$ has a value of $\backslash (\backslash$$ $80\backslash )$ million. Carter is otherwise identical to Markum Co$.,$ but has $\backslash (\backslash$$ $32\backslash )$ million in debt. Suppose that both firms are growing at a rate of $\backslash (7\backslash \%\backslash ),$ the corporate tax rate is $\backslash (38\backslash \%\backslash ),$ the cost of debt is $\backslash (8\backslash \%\backslash ),$ and Markum's cost of equity is $\backslash (9\backslash \%\backslash )($assume $\backslash (\backslash$mathbf$\{$r$\}\_\{\backslash$mathbf$\{$s U$\}\}\backslash )$ is the appropriate discount rate for the tax shield$).$

Use the Modigliani and Miller theory extension for growth to complete the following table. $($Note: Round all final answers to two decimal places.$)$