Sauer Milk Inc. wants to determine the minimum cost of capital point for the firm. Assume it is considering the following financial plans: Cost (after tax) Weights
Plan A Debt 4.0 % 15 % Preferred stock 8.0 10 Common equity 16.0 75
Plan B Debt 4.8 % 25 % Preferred stock 8.6 10 Common equity 13.0 65
Plan C Debt 5.0 % 35 % Preferred stock 17.7 10 Common equity 10.5 55
Plan D Debt 15.0 % 45 % Preferred stock 18.4 10 Common equity 12.6 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.)
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