Question
(Very Very Urgent)The Ali Corporation finds it is necessary to determine its marginal cost of capital. Ali's current capital structure calls for 40 percent debt,
(Very Very Urgent)The Ali Corporation finds it is necessary to determine its marginal cost of capital. Ali's current capital structure calls for 40 percent debt, 30 percent preferred stock, and 30 percent common equity. Initially, common equity will be in the form of retained earnings and then new common stock . The costs of the various sources of financing are as follows: debt, 9.6 percent; preferred stock, 9.0 percent; retained earnings, 10.0 percent; and new common stock, 11.4 percent. If the firm has $28.5 million in retained earnings, at what size capital structure will the firm run out of retained earnings_______ million
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