Question: Adding growth to the model Sunny Co. has a value of $50 million. Markus is otherwise identical to Sunny Co., but has $20 million in

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

Adding growth to the model Sunny Co. has a value of $50 million. Markus is otherwise identical to Sunny Co., but has $20 million in debt. Suppose that both firms are growing at a rate of 6%, the corporate tax rate is 40%, the cost of debt is 7%, andSunny's cost of equity is 9% (assume r_sU is the appropriate discount rate for the tax shield). Use the Modigliani and Miller theory extension for growth to complete the following table

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