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Delta Corporation has the following capital structure: Cost ( aftertax ) Weights Weighted Cost Debt ( Kd ) 6 . 5 % 1 0 %

Delta Corporation has the following capital structure:
Cost (aftertax) Weights Weighted Cost
Debt (Kd)6.5%10%.65%
Preferred stock (Kp)5.2251.30
Common equity (Ke)(retained earnings)9.5656.18
Weighted average cost of capital (Ka)8.13%
If the firm has $39 million in retained earnings, at what size capital structure will the firm run out of retained earnings?

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