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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)
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 5.0% 10. 14.0 20% 1@ 70 5.2% 10.2 15.0 30% 10 60 Plan A Debt Preferred stock Corrmon equity Plan B Debt Preferred stock Cormon equity Plan C Debt Preferred stock Common equity Plan D Debt Preferred stock Corrmon equity 6.0% 15.7 11.6 40% 10 50 12.0% 16.6 13.6 50% 10 40 a-1. Compute the weighted average cost for four plans. (Do not round intermediate calculations. Input your answers as a percent rounded to 2 decimal places.) Weighted Cost % % Plan A Plan B Plan C Plan D % % a-2. Which of the four plans has the lowest weighted average cost of capital? O Plan A O Plan B O Plan C O Plan D
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