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A firm has determined its cost of each source of capital and a target capital structure, which is composed of the following sources and current

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A firm has determined its cost of each source of capital and a target capital structure, which is composed of the following sources and current market value proportions: Source of Capital Long-term debt Preferred stock Common stock equity Market Proportions 45% 10 45 After-Tax Cost 5% 14 22 Other things remaining constant, if the firm were to shift toward a capital structure, which of the following options would produces the lowest weighted average cost of capital: OA 60% long-term debt, 30% common stock, and 10% preferred stock OB. 20% long-term debt, 60% common stock, and 20% preferred stock OC 60% long-term debt, 20% common stock, and 20% preferred stock OD.45% long-term debt, 40 % common stock, and 15% preferred stock

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