Miller model

Scorecard Corp. and Carlson Co$.$ are identical in every respect except that Scorecard is unlevered and Carlson has $$9\mathrm{.}0$ million of $5\%$ bonds

outstanding. Assume all of the following:

All of Modigliani and Miller's assumptions are met.

Both firms are subject to a $40\%$ corporate tax rate.

EBIT is $$3\mathrm{.}0$ million for both firms.

Investors in both firms face a tax rate $(T_d)$ of $26\%$ on debt income and a tax rate $(T_s)$ of $12\%$ on stock income.

The rate of return before personal taxes $(r_{sU})$ is $8\%.$

Use Miller's model to fill in the table for Scorecard Corp. and Carlson Co$.$Miller model

Scorecard Corp. and Carlson Co$.$ are identical in every respect except that Scorecard is unlevered and Carlson has $$9\mathrm{.}0$ million of $5\%$ bonds

outstanding. Assume all of the following:

All of Modigliani and Miller's assumptions are met.

Both firms are subject to a $40\%$ corporate tax rate.

EBIT is $$3\mathrm{.}0$ million for both firms.

Investors in both firms face a tax rate $(T_d)$ of $26\%$ on debt income and a tax rate $(T_s)$ of $12\%$ on stock income.

The rate of return before personal taxes $(r_{sU})$ is $8\%.$

Use Miller's model to fill in the table for Scorecard Corp. and Carlson Co$.$

Scorecard Corp.