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  3. 2. adding growth to the model sunny co. has a valu

2. Adding growth to the model Sunny Co. has a value of $70 million. Markus...

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2. Adding growth to the model Sunny Co. has a value of $70 million. Markus is otherwise identical to Sunny Co., but has $28 million in debt. Suppose that both firms are growing at a rate of 7%, the corporate tax rate is 38%, the cost of debt is 7%, and Sunny's cost of equity is 9% (assume rzu is the appropriate discount rate for the tax shield). Use the Modigliani and Miller theory extension for growth to complete the following table. (Note: Round all final answers to two decimal places.) Markus Co. Sunny Co. 570 million Value of the firm Value of the stock 570 million Cost of equity 9%

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