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2. Adding growth to the model Aa Aa Carlson Co. has a value of $20 million. Baker is otherwise identical to Carlson Co., but has

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2. Adding growth to the model Aa Aa Carlson Co. has a value of $20 million. Baker is otherwise identical to Carlson Co., but has $8 million in debt. Suppose that both firms are growing at a rate of 6%, the corporate tax rate is 39%, the cost of debt is 6%, and Carlson'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. Value of the firm Value of the stock Cost of equity Carlson Co. $20 million $20 million 15%

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