Eaton International Corporation has the following capital structure:

	Cost (after tax)	Weightings	Weighted Cost
Debt (Kd)	7.1	%	25	%	1.78	%
Preferred stock (Kp)	8.6		10		0.86
Common equity (Ke) (retained earnings)	14.1		65		9.17
Total: Weighted average cost of capital (Ka)			100		11.81	%

a.If the firm has $19.5 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 7.1 percent cost of debt referred to above applied only to the first $14 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