Delta Corporation has the following capital structure:

Cost

(aftertax)WeightsWeighted

CostDebt (K_d)6.2%25%1.55%Preferred stock (K_p)5.5251.38Common equity (K_e) (retained earnings)15.5507.75Weighted average cost of capital (K_a)10.68%

a.If the firm has $22 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 6.2 percent cost of debt referred to earlier applies only to the first $16 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