Question
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 Plan A Debt 6.0 % 25 % Preferred stock 12.0 15 Common equity 16.0 60 Plan B Debt 6.2 % 35 % Preferred stock 12.2 15 Common equity 17.0 50 Plan C Debt 7.0 % 45 % Preferred stock 11.7 15 Common equity 7.6 40 Plan D Debt 7.0 % 55 % Preferred stock 12.6 15 Common equity 9.8 30 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.)
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