Weighted average cost of capital (LO1) 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 5.0% 20% Preferred stock 10.0 10 Common equity 14.0 70 Plan B Debt 5.5% 30% Preferred stock 10.5 10 Common equity 15.0 60 Plan C Debt 6.0% 40% Preferred stock 10.7 10 Common equity 15.8 50 Plan D Debt 8.0% 50% Preferred stock 11.2 10 Common equity 17.5 40 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