Macon Corporation has a target capital structure consisting of 40% Debt and 60% Common Equity. Macon can borrow up to $400,000 from it's banker at an after-tax rate of 6.75%. Additional debt can be raised by issuing 10-year semi-annual bonds that will carry an after-tax cost of 8.00%. The firm has $500,000 available in retained earnings. The cost of retained earnings is 14.00%. If new common shares are issued, the cost will be 16.2%. Calculate the first break point in the Macon Corporation capital funding.

Macon Corporation has a target capital structure consisting of 40% Debt and 60% Common Equity. Macon can borrow up to $400,000 from it's banker at an after-tax rate of 6.75%. Additional debt can be raised by issuing 10 -year semi-annual bonds that will carry an after-tax cost of 8.00%. The firm has $500,000 available in retained earnings. The cost of retained earnings is 14.00%. If new common shares are issued, the cost will be 16.2%. Calculate the first break point in the Macon Corporation capital funding