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

Sauer Milk Inc. wants to determine the minimum cost of capital point for the firm. Assume it is considering the following financial plans: (aftertax) Weights Plan A Debt Preferred stock Common equity Plan B Debt Preferred stock Common equity Plan C Debt Preferred stock Common equity Plan D Debt Preferred stock Common equity 8.0% 16.0 20.0 15% 10 75 8.2% 10.2 15.0 25% 10 65 9.0% 14.7 14.5 35% 10 11.0% 15.6 15.8 45% 10 45 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 Plan A Plan B Plan C Plan D a-2. Which of the four plans has the lowest weighted average cost of capital? Plan A Plan B Plan C Plan D b. What is the relationship between the various types of financing costs and the debt-to-equity ratio? All types of financing costs increase as the debt-to-equity ratio increases All types of financing costs decrease as the debt-to-equity ratio increases