Question: 4. Adding growth to the model Aa Baker Corp. has a value of $50 million. Tucci is otherwise identical to Baker Corp., but has $20

 4. Adding growth to the model Aa Baker Corp. has a

4. Adding growth to the model Aa Baker Corp. has a value of $50 million. Tucci is otherwise identical to Baker Corp., but has $20 million in debt. Suppose that both firms are growing at a rate of 7%, the corporate tax rate is 39%, the cost of debt is 6%, and Baker'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: Baker Corp. Tucci Co. Value of the firm Value of the stoclk Cost of equity $50 million $50 million 15%

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