a) 32.64 million, 32.20 million, 32.67 million, 32.92 million b) 21.20 million, 20.64 million, 20.67 million, 20.92 million c) 20.23%, 20.16%, 20.22%, 20.09%

5. Adding growth to the model Aa Aa Scorecard Corp. has a value of $30 million. Carlson is otherwise identical to Scorecard Corp., but has $12 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 6% and Scorecard'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: Scorecard Corp.Carlson Co. Value of the firm Value of the stock Cost of equity $30 million $30 million 15% | 5. Adding growth to the model Aa Aa Scorecard Corp. has a value of $30 million. Carlson is otherwise identical to Scorecard Corp., but has $12 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 6% and Scorecard'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: Scorecard Corp.Carlson Co. Value of the firm Value of the stock Cost of equity $30 million $30 million 15% |