Problem 11-29 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 50 percent debt. 20 percent preferred stock, and 30 percent common equity. Initially, common equity will be in the form of retained earnings (x) and then new common stock (Kn). The costs of the various sources of financing are as follows debt (after-tax 62 percent , preferred stock, 70 percent, retained earnings, 13.0 percent and new common stock 14 4 percent a. What is the initial weighted average cost of capital? (Include debt, preferred stock and common equity in the form of retained earnings, Ke.) (Do not round intermediate calculations. Input your answers as a percent rounded to 2 decimal places.) Weighted Cost Debt Preferred stock Common equity Weighted average cost of capital 0.005 Help Save the Chach my work 3 b. If the firm has $25 5 million in retained earnings, at what size capital structure will the firm run out of retained camino Enter your answer in millions of dollars feg. $10 million should be entered as "10"). Capital structure size (X Ft Herences c. What will the marginal cost of capital be immediately after that point? Equity will remain at 30 percent of the capital structure. But will all be in the form of new common stock. (Do not round intermediate calculation. Input your answer as percent munded to 2 decimal places. Marginal cost of capital d. The 62 percent cost of debt referred to above applies only to the first $48 million of debt. After that, the cost of debt will be 92 percent. At what size capital structure will there be a change in the cost of debt? (Enter your answer in millions of dollars (0.9.510 million should be entered as "10").) Capital structure size (Z) milion e. What will the marginal cost of capital be immediately after that point? (Consider the facts in both parts cand d) (Do not round intermediate calculations. Input your answer as o percent rounded to 2 decimal places.) Marginal cost of capital