Using Hudson Bancrops estimates of the costs of debt and equity in case exhibit 8, which rating category has the lowest overall cost of funds?

A) AAA

B) AA

C) A

D) BBB

E) BB

F) B

496 Part Six Management of the Corporate Capital Structure EXHIBIT 8I Capital Costs by Rating Category Cost of debt (pretax) Cost of equity 5.47% 5.50% 5.70% 6.30% 9.00% 12.00% 10.25% 10.35% 10.50% 10.60% 12.00% 14.25% Source of data: Hudson Bancorp