The Nolan Corporation finds that it is necessary to determine its marginal cost of capital. Nolan$$s current capital structure calls for $45$ percent debt, $15$ percent preferred stock, and $40$ 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, $4\mathrm{.}2$ percent; preferred stock, $6$ percent; retained earnings, $14$ percent; and new common stock, $15\mathrm{.}2$ percent.

a$.$ What is the initial weighted average cost of capital? $($Include debt, preferred stock, and common equity in the form of retained earnings, Ke$.)($Do not round intermediate calculations. Round the final answer to $2$ decimal places.$)$

Weighted average cost of capital

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b$.$ If the firm has $$26$ million in retained earnings, at what size of investment will the firm run out of retained earnings? $($Enter the answer in millions.$)$

Capital structure size $($X$)$ $

million

c$.$ What will the marginal cost of capital be immediately after that point? $($Equity will remain at $40$ percent of the capital structure, but it will all be in the form of new common stock, Kn$.)($Do not round intermediate calculations. Round the final answer to $2$ decimal places.$)$

Marginal cost of capital

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d$.$ The $4\mathrm{.}2$ percent cost of debt referred to above applies only to the first $$45$ million of debt. After that the cost of debt will be $6\mathrm{.}5$ percent. At what size of investment will there be a change in the cost of debt? $($Enter the answer in millions.$)$

Capital structure size $($Z$)$ $

million

e$.$ What will the marginal cost of capital be immediately after that point? $($Consider the facts in both parts c and d$.)($Do not round intermediate calculations. Round the final answer to $2$ decimal places.$)$

Marginal cost of capital

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