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Delta Corporation has the following capital structure: Debt (Kd) Preferred stock (Xp) Common equity (Ke) (retained earnings) Weighted average cost of capital (Ka) Cost

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Delta Corporation has the following capital structure: Debt (Kd) Preferred stock (Xp) Common equity (Ke) (retained earnings) Weighted average cost of capital (Ka) Cost (aftertax) Weighted Weights Cost 8.2% 30 2.468 7.5 10 0.75 13.5 60 8.10 11.31 a. If the firm has $30 million in retained earnings, at what size capital structure will the firm run out of retained earnings? Note: Enter your answer in millions of dollars (e.g., $10 million should be entered as "10". Capital structure size (X) million b. The 8.2 percent cost of debt referred to earlier applies only to the first $15 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? Note: Enter your answer in millions of dollars (e.g., $10 million should be entered as "10". Capital structure size (Z) million.

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