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Delta Corporation has the following capital structure: Weighted aftertax Weights 1.38 2.63 Debt Preferred stock (6) Common equity (Ka) (retained eamings) Weighted average cost of
Delta Corporation has the following capital structure: Weighted aftertax Weights 1.38 2.63 Debt Preferred stock (6) Common equity (Ka) (retained eamings) Weighted average cost of capital (6) 9.25 a. If the firm has $26 million in retained earings, at what size capital structure will the firm run out of retained earings? (Enter your answer in millions of dollars (.g., $10 million should be entered as "10").) Capital structure b. The 5.5 percent cost 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 change in the cost of debt? (Enter your answer in millions of dollars (e.g., $10 million should be entered as "10").) Capital structures )
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