2. Adding growth to the model

Baker Corp. has a value of $30 million. Tucci is otherwise identical to Baker Corp., but has $12 million in debt. Suppose that both firms are growing at a rate of 5%, the corporate tax rate is 40%, the cost of debt is 6%, and Bakers cost of equity is 11% (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.)

	Baker Corp.	Tucci Co.
Value of the firm	$30 million
Value of the stock	$30 million
Cost of equity	11%