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Delta Corporation has the following capital structure: Cost (aftertax) Weights Weighted Cost Debt ( K d ) 6.1 % 30 % 1.83 % Preferred stock
Delta Corporation has the following capital structure:
Cost (aftertax) | Weights | Weighted Cost | |||||||
Debt (Kd) | 6.1 | % | 30 | % | 1.83 | % | |||
Preferred stock (Kp) | 7.6 | 20 | 1.52 | ||||||
Common equity (Ke) (retained earnings) | 13.1 | 50 | 6.55 | ||||||
Weighted average cost of capital (Ka) | 9.90 | % | |||||||
a. If the firm has $23 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").)
Capitol structure size (X) ?
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