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21. Sauer Milk Inc. wants to determine the minimum cost of capital point for the firm. Assume it is considering the following financial plans: Cost

21. Sauer Milk Inc. wants to determine the minimum cost of capital point for the firm. Assume it is considering the following financial plans: Cost (Aftertax)Weights Plan ADebt4.0%30%Preferred stock8.015Common equity12.055Plan BDebt4.5%40%Preferred stock8.515Common equity13.045Plan CDebt5.0%45% Preferred stock18.715Common equity12.840Plan DDebt12.0%50%Preferred stock19.215Common equity14.535Page 367 a. Which of the four plans has the lowest weighted average cost of capital? (Round to two places to the right of the decimal point.) b. Briefly discuss the results from Plan C and Plan D, and why one is better than the other.

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