Delta Corporation has the following capital structure:

Cost Weighted

(aftertax) Weights Cost

Debt (k_d) 10.6% 15% 1.59%

Preferred stock(k_p) 9.8 2.5 2.45

Common Equity(k_e) 8.2 60 4.92

Weighted average cost of capital (K_e) 8.96%

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a. If the firm has $51 million in retained earnings, at what size capital structure will the firm run out of retained earnings? (enter your answer in millions of doll;ars(e.g. $10 milliomn should be entered as "10").

Capital structure size (X) $_________________million

b. The 10.6 percent copst of debt referred to earlier applies only to the first $18 million of debt. After that the cost of debt will go up. At what size capital structure will there be a cchange in the ost of debt? (enter your answer in millions of dollars.

Capital struture size (Z) $_________________million