Determine the minimum cost of capital point for the firm

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Reference no: EM131892656

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 6.0% 25%

Preferred stock 12.0 15

Common equity 16.0 60

Plan B

Debt 6.2% 35%

Preferred stock 12.2 15

Common equity 17.0 50

Plan C

Debt 7.0% 45%

Preferred stock 11.7 15

Common equity 7.6 40

Plan D

Debt 7.0% 55%

Preferred stock 12.6 15

Common equity 9.8 30

(a-1) Compute the weighted average cost for four plans. (Round your intermediate and final answers to 2 decimal places. Omit the "%" sign in your response.)

Weighted cost

Plan A __?__%

Plan B __?__%

Plan C __?__%

Plan D __?__%

Reference no: EM131892656

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