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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 Particulars Cost of After
Sauer Milk Inc, wants to determine the minimum cost of capital point for the firm Assume it is considering the following
| Particulars | Cost of After tax) | Weights | |
| Plan A | |||
| Debt | 4.0% | 30% | |
| Perferred Stock | 8.0 | 15 | |
| Common Equity | 12.0 | 55 | |
| Plan B | |||
| Debt | 4.5% | 40% | |
| Perferred Stock | 8.5 | 15 | |
| Common Equity | 13.0 | 45 | |
| Plan C | |||
| Debt | 5.0% | 45% | |
| PreFerred Stock | 18.7 | 15 | |
| Common Equity | 12.8 | 40 | |
| Plan D | |||
| Debt | 12.0% | 50 | |
| Preferred Stock | 19.2 | 15 | |
| Common Equity | 14.5 | 35 | |
| a. Which of the four plans has the lowest weighted average cost of capital? (Round to two places to the right of decimal point.) b. Briefly discuss the results from Plan C and Plan D, and why one is better than the other. |
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