The Nolan Corporation finds it is necessary to determine Its marginal cost of capital. Nolan's current capital structure calls for $40$

percent debt, $10$ percent preferred stock, and $50$ percent common equity. Initially, common equity will be in the form of retalned

earnings $(K_c)$ and then new common stock $(K_n).$ The costs of the varlous sources of financing are as follows: debt $($after$-$tax$),7\mathrm{.}2$

percent; preferred stock, $5$ percent; retalned earnings, $12$ percent; and new common stock, $13\mathrm{.}2$ percent.

a$.$ What is the initial weighted average cost of capital? $($Include debt, preferred stock, and common equity in the form of retained

earnings, $K_{e.}.)$

Note: Do not round intermedlate calculations. Input your answers as a percent rounded to $2$ decimal places.

b$.$ If the firm has $$29$ million In retained earnings, at what size capital structure will the firm run out of retalned earnings?

Note: Enter your answer in millions of dollars $($e$.$g$..$ $$10$ million should be entered as $"10").$

Capital structure size $(x)$

million

c$.$ What will the marginal cost of capital be immediately after that point? $($Equity will remain at $50$ percent of the capital structure, but

will all be in the form of new common stock, $K_n.)$

Note: Do not round intermedlate calculations. Input your answer as a percent rounded to $2$ decimal places.

Marginal cost of capital

$\%$

d$.$ The $7\mathrm{.}2$ percent cost of debt referred to earlier applies only to the first $$44$ million of debt. After that, the cost of debt will be $9\mathrm{.}2$

percent. At what size capital structure will there be a change in the cost of debt?

Note: Enter your answer in millions of dollars $($e$.$g$.,$ $$10$ million should be entered as $"10").$

Capital structure size $($Z$)$

e$.$ What will the marginal cost of capital be immedlately after that point? $($Consider the facts in both parts $c$ and $d.)$

Note: Do not round intermedlate calculations. Input your answer as a percent rounded to $2$ decimal places.