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Delta Corporation has the following capital structure: Cost (aftertax),Weights, Weighted Cost Debt ( K d )7.5%,15%,1.13% Preferred stock ( K p )6.2,10,0.62 Common equity (
Delta Corporation has the following capital structure:
Cost (aftertax),Weights, Weighted Cost
Debt (Kd)7.5%,15%,1.13%
Preferred stock (Kp)6.2,10,0.62
Common equity (Ke) (retained earnings)8.5,75,6.38
Weighted average cost of capital (Ka)8.12%
a.If the firm has $48 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").)
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