Delta Corporation has the following capital structure:
Cost (aftertax) Weights Weighted Cost
Debt (Kd) 8.6% 10% 0.86%
Preferred stock (Kp) 6.8 20 1.36
Common equity (Ke) (retained earnings) 10.2 70 7.14
Weighted average cost of capital (Ka) 9.36%
a. If the firm has $49 million in retained earnings, at what size capital structure will the firm run out of retained earnings?