Matsumoto Limited $($ML$),$ a large conglomerate firm, has a capital structure that currently consists of $20$ percent long$-$term debt, $10$ percent preferred stock, and $70$ percent common equity. ML has determined that it will raise funds in the future using $40$ percent long$-$term debt, $10$ percent preferred stock, and $50$ percent common equity.

ML can raise up to $$60$ million in the long$-$term debt market at a pretax cost of $16$ percent. Beyond $$60$ million, the pretax cost of long$-$term debt is expected to increase to $18$ percent. Preferred stock can be raised at a cost of $20$ percent. The limited demand for this security permits ML to sell only $$19$ million of preferred stock. ML$\text{'}$s marginal tax rate is $40$ percent. ML$\text{'}$s stock currently sells for $$24$ per share and has a beta of $1\mathrm{.}5.$ ML pays no dividends and is not expected to pay any dividends for the foreseeable future. Investment advisory services expect the stock price to $$23\mathrm{.}03.$ ML expects earnings after taxes and available for common stockholders to be $$50$ million.

Compute the marginal cost of capital schedule for ML$,$ and determine the break points in the schedule. Use Table II to answer the questions.

Round your answers for break points to the nearest dollar. Round your answers for weighted marginal cost of capital to two decimal places. Enter your answer in whole dollar. For example, an answer of $$1\mathrm{.}20$ million should be entered as $1,200,000,$ not $1\mathrm{.}20.$

Break point Weighted marginal cost of capital