Best writers. Best papers. Let professionals take care of your academic papers

Order a similar paper and get 15% discount on your first order with us
Use the following coupon "FIRST15"
ORDER NOW

capital structure

/in /by

Question

Delta Corporation has the following capital structure:Cost />(aftertax)WeightsWeighted
CostDebt (Kd)7.5%15%1.13%Preferred stock (Kp)6.2100.62Common equity (Ke) (retained earnings)8.5756.38Weighted average cost of capital (Ka)8.12%
a. If the firm has $48 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

b. The 7.5 percent cost of debt referred to earlier applies only to the first $15 million of debt. After that the cost of debt will go up. At what size capital structure will there be a change in the cost of debt? (Enter your answer in millions of dollars (e.g., $10 million should be entered as “10”).)
Capital structure size (Z)     ________million

 
Looking for a Similar Assignment? Order now and Get 10% Discount! Use Coupon Code "Newclient"