Delta Corporation has the following capital structure: Cost Weighted (aftertax) Weights Cost Debt (Ka) Preferred stock (Kp) Common equity (Ke) (retained earnings) 5.6% 25% 1.40% 10.2 25 2.55 13.2 50 6.60 Weighted average cost of capital (Ka) 10.55% a. If the firm has $31 million in retained earnings, at what size capital structure will the firm run out of retained earnings? (Enter your answer in millions of dollars (e.g., $10 million should be entered as "10").) Capital structure size (X) million
Delta Corporation has the following capital structure: Cost Weighted (aftertax) Weights Cost Debt (Ka) Preferred stock (Kp) Common equity (Ke) (retained earnings) 5.6% 25% 1.40% 10.2 25 2.55 13.2 50 6.60 Weighted average cost of capital (Ka) 10.55% a. If the firm has $31 million in retained earnings, at what size capital structure will the firm run out of retained earnings? (Enter your answer in millions of dollars (e.g., $10 million should be entered as "10").) Capital structure size (X) million
Chapter13: Capital Structure Concepts
Section: Chapter Questions
Problem 8P
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