Problem 11-29 (Algo) Marginal cost of capital [LO11-5] The McGee Corporation finds it is necessary to determine its marginal cost of capitaL McGee's current capital structure calls for 40 percent debt, 5 percent preferred stock, and 55 percent common equity. Initially, common equity will be in the form of retained earnings (Ke) and then new common stock (Kn). The costs of the various sources of financing are as follows: debt (after-tax), 6.0 percent, preferred stock, 8.0 percent, retained earnings, 10.0 percent, and new common stock, 10.2 percent. a. What is the initial weighted average cost of capital? (include debt, preferred stock, and common equity in the form of retained eamings, Kr.) Note: Do not round intermediate calculations. Input your answers as a percent rounded to 2 decimol places. b. If the firm has $38.5 miltion in retained earnings, af what size capltal structure will the firm run out of retained eatrings? Note: Enter your answer in millions of dollars (e.9., $10 million should be entered as "10"). c. What will the marginal cost of capltal be immediately after that point? (Equity will remain at 55 percent of the capital structure, but will all be in the form of new common stock, Kn ) Note: Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places. d. The 6.0 percent cost of debt referred to above applich only to the first $48 million of debt. After that, the cost of debt will be 7.2 percent. At what size capital structure will there be a change in the cost of debt? Note: Enter your onswer in millions of dollars (e.9., $10 million should be entered as "10"). 6. What will the marginal cost of capital be immediately after that point? (Consider the facts in both parts c and d ) Do not round intermedinte colculations. Input your answer as o percent rounded to 2 decimal places