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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

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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 (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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