Delta corporation has the following capital structure: cost (aftertax) weights weighted cost debt (kd) 5.2 % 10 % 0.52 % preferred stock (kp) 12.2 20 2.44 common equity (ke) (retained earnings) 7.1 70 4.97 weighted average cost of capital (ka) 7.93 % a. if the firm has $28 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" b. the 5.2 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?

Which of the following statements is correct? a major disadvantage of a partnership relative to a corporation is the fact that federal income taxes must be paid by the partners rather than by the firm itself. in a typical partnership, liability for other partners’ misdeeds is limited to the amount of a particular partner’s investment in the business. true in a limited partnership, the limited partners have voting control, while the general partner has operating control over the business, and the limited partners are individually responsible, on a pro rata basis, for the firm’s debts in the event of bankruptcy. partnerships have more difficulty attracting large amounts of capital than corporations because of such factors as unlimited liability, the need to reorganize when a partner dies, and the illiquidity of partnership interests.