Delta Corporation has the following capital structure:

	Cost (aftertax)			Weights			Weighted Cost
Debt (Kd)		7.1	%		15	%		1.07	%
Preferred stock (Kp)		8.6			25			2.15
Common equity (Ke) (retained earnings)		12.1			60			7.26
Weighted average cost of capital (Ka)								10.48	%

a. If the firm has $27 million in retained earnings, at what size capital structure will the firm run out of retained earnings? (Enter your answer in millions of dollars (e.g., $10 million should be entered as "10").

Capital structure size (X)

million

b. The 7.1 percent cost of debt referred to earlier applies only to the first $9 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? (Enter your answer in millions of dollars (e.g., $10 million should be entered as "10").)

Capital structure size (Z)

million