3. Miller model Aa Aa Carlson Co. and Baker Corp. are identical in every respect except that Carlson is unlevered and Baker has $4.0 million of 5% bonds outstanding. Assume all of the following: 1. All of Modigliani and Miller's assumptions are met. 2. Both firms are subject to a 40% corporate tax rate. 3. EBIT is $2.0 million for both firms. 4. Investors in both firms face a tax rate (Ta) of 34% on debt income and a tax rate (Ts) of 8% on stock income. 5. The rate of return before personal taxes (ru) is 12%. Use Miller's model to fill in the table for Carlson Co. and Baker Corp. Carlson Co. Baker Corp. Value of the firm Value of the stock Cost of equity WACC $10.00 million$11.60 million