3. Miller model

Scorecard Corp. and Carlson Co. are identical in every respect except that Scorecard is unlevered and Carlson has $19.8 million of 5% bonds outstanding. Assume all of the following:

1.	All of Modigliani and Millers assumptions are met.
2.	Both firms are subject to a 34% corporate tax rate.
3.	EBIT is $6.0 million for both firms.
4.	Investors in both firms face a tax rate (Tdd) of 28% on debt income and a tax rate (Tss) of 8% on stock income.
5.	The rate of return before personal taxes (rsUrsU) is 8%.

Use Millers model to fill in the table for Scorecard Corp. and Carlson Co.

	Scorecard Corp.	Carlson Co.
Value of the firm
Value of the stock
Cost of equity
WACC