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Carter Co. has a value of $40 million. Buleigh is otherwise identical to Carter Co., but has $16 million in debt. Suppose that both firms

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Carter Co. has a value of $40 million. Buleigh is otherwise identical to Carter Co., but has $16 million in debt. Suppose that both firms are growing at a rate of 5%, the corporate tax rate is 35%, the cost of debt is 7%, and Carter's cost of equity is 9% (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: Burleigh Co. Value of the firm Value of the stock Cost of equity Carter Co. $40 million $40 million 9%

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