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Delta Corporation has the following capital structure: Debt (KD Preferred stock (Kp) Common equity (Kel (retained earnings) Weighted average cost of capital (Ka) Cost (aftertax)

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Delta Corporation has the following capital structure: Debt (KD Preferred stock (Kp) Common equity (Kel (retained earnings) Weighted average cost of capital (Ka) Cost (aftertax) Weights 10.2% 20% 9.5 20 11.5 60 Weighted Cost 2.048 1.90 6.90 10.84% a. If the firm has $21 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 10.2 percent cost of debt referred to earlier applies only to the first $25 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 (2) million

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