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Sauer Milk Inc wants to determine the minimum cost of capital point for the firm Assume it is considening the following financial plans Cost (aftertax)

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Sauer Milk Inc wants to determine the minimum cost of capital point for the firm Assume it is considening the following financial plans Cost (aftertax) Weights Plan A Debt Preferred stock Common equity Plan B Deb Preferred stock Common equity Plan C Debt Preferred stock Common equity 80% 16.0 200 28% 60 88% 168 20.0 35% 15 50 15.7 10.5 15 40 Plan D Debt Preferred stock Common equity 130% 16.4 12.8 55% 15 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.) Weighted Cost Pian 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 b. What is the relationship between the various types of financing costs and the debt-to-equity rato O All types of financing costs increase as the debt-to-equity ratio increases O All types of financing costs decrease as the debt-to-equity ratio increases

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