2. Adding growth to the model

Tucci Co. has a value of $80 million. Strong is otherwise identical to Tucci Co., but has $32 million in debt. Suppose that both firms are growing at a rate of 6%, the corporate tax rate is 35%, the cost of debt is 8%, and Tuccis cost of equity is 15% (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.)

	Tucci Co.	Strong Co.
Value of the firm	$80 million
Value of the stock	$80 million
Cost of equity	15%