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Eaton International Corporation has the following capital structure: Cost ( after tax ) Weightings Weighted Cost Debt ( Kd ) 6 . 1 % 3
Eaton International Corporation has the following capital structure:
Cost
after tax Weightings Weighted
Cost
Debt Kd
Preferred stock Kp
Common equity Keretained earnings
Weighted average cost of capital Ka
a If the firm has $ million in retained earnings, at what size capital structure will the firm run out of retained earnings? Enter the answer in millions.
Capital structure size X $
million
b The percent cost of debt referred to above applied only to the first $ 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 the answer in millions.
Capital structure size Z $
million
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