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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 Plan A Debt Preferred stock Common equity Plan B 6.08 12.0 16.0 25% 15 60 Debt 6.2% 12.2 17.0 35% 15 50 Preferred stock Common equity Planc Debt Preferred stock Common equity Plan D 7.08 11.7 7.6 45% 15 40 Debt Preferred stock Common equity 7.0% 12.6 9.8 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 % Plan A Plan B % % Plan C Plan D %Step by Step Solution
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