Question: 2. Adding growth to the model Sunny Co. has a value of $20 million. Markus is otherwise identical to Sunny Co., but has $8 million

 2. Adding growth to the model Sunny Co. has a value

2. Adding growth to the model Sunny Co. has a value of $20 million. Markus is otherwise identical to Sunny Co., but has $8 million in debt. Suppose that both firms are growing at a rate of 5%, the corporate tax rate is 39%, the cost of debt is 7%, and Sunny's cost of equity is 9% (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. (Note: Round all final answers to two decimal places.) Sunny Co. Markus Co. Value of the firm $20 million Value of the stock $20 million Cost of equity 9%

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