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Tucci Co. and Strong Co. are identical in every respect except that Tucci is unlevered and Strong has $19.8 million of 5% bonds outstanding. Assume
Tucci Co. and Strong Co. are identical in every respect except that Tucci is unlevered and Strong has $19.8 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 34% corporate tax rate. 3. EBIT is $6.0 million for both firms. 4. 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. 5. The rate of return before personal taxes (r_su) is 8%. Use Miller's model to fill in the table for Tucci Co. and Strong Co
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