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Eaton International Corporation has the following capital structure Debt (K) Preferred stock (p) Common equity (ke) (retained earnings) weighted average cost of capital (ka) Cost
Eaton International Corporation has the following capital structure Debt (K) Preferred stock (p) Common equity (ke) (retained earnings) weighted average cost of capital (ka) Cost (after tax) Melittings 30% 9.2 15 16.2 55 Weighted Cost 2.85% 1.38 8.91 13.145 2. If the firm has $22 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 9.5 percent cost of debt referred to above applied only to the first $36 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 (2) million
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