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23 1.8 points Skipped eBook Hint Print References Delta Corporation has the following capital structure: Debt (Kd) Preferred stock (Kp) Common equity (Ke) (retained earnings)
23 1.8 points Skipped eBook Hint Print References Delta Corporation has the following capital structure: Debt (Kd) Preferred stock (Kp) Common equity (Ke) (retained earnings) Weighted average cost of capital (K) Capital structure size (X) a. If the firm has $51 million in retained earnings, at what size capital structure will the firm run out of retained earnings? Note: Enter your answer in millions of dollars (e.g., $10 million should be entered as "10". million Capital structure size (Z) Cost (aftertax) 10.6% 9.8 8.2 Weights 15% 25 60 million Weighted Cost 1.59% 2.45 4.92 8.96% b. Note: Enter your answer in millions of dollars (e.g., $10 million should be entered as "10".The 10.6 percent cost of debt referred to earlier applies only to the first $18 million of debt. After that the cost of debt will go up. At what size capital structure will there be a change in the cost of debt?
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