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Sauer Milk Incorporated wants to determine the minimum cost of capital point for the firm. Assume it is considering the following financial plans: Cost (aftertax)
Sauer Milk Incorporated 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 3.0% 15% Preferred stock 6.0 10 Common equity 10.0 75 Plan B Debt 3.2% 25% Preferred stock 6.2 10 Common equity 11.0 65 Plan C Debt 4.0% 35% Preferred stock 6.7 10 Common equity 10.6 55 Plan D Debt 7.0% 45% Preferred stock 7.6 10 Common equity 12.6 45 a-1. Compute the weighted average cost for four plans. Note: 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? multiple choice Plan A Plan B Plan C Plan D
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