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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 6.0% 12. 20.0 25% 15 60 6.2% 12.2 17. 35% 15 50 Plan A Debt Preferred stock Common equity Plan B Debt Preferred stock Common equity Planc Debt Preferred stock Common equity Plan D Debt Preferred stock Common equity 7.0% 16.7 12.6 45% 15 40 14.0% 17.6 14.6 55% 15 30 2-1. 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 96 Plan B %6 Plan C 96 Plan D 96 a-2. Which of the four plans has the lowest weighted average cost of capital? Plan A O Plan B O Plan C O Plan D
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