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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: Plan A

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

Plan A
Debt 7.0 % 20 %
Preferred stock 14.0 10
Common equity 18.0 70
Plan B
Debt 7.5 % 30 %
Preferred stock 14.5 10
Common equity 19.0 60
Plan C
Debt 8.0 % 40 %
Preferred stock 14.7 10
Common equity 10.8 50
Plan D
Debt 10.0 % 50 %
Preferred stock 15.2 10
Common equity 12.5 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.)

a-2. Which of the four plans has the lowest weighted average cost of capital?

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