finance- Sauer Milk Company is trying to determine its optimal capital structure

QUESTION

PLEASE SHOW ALL WORK Sauer Milk Company is trying to determine its optimal capital structure The following options are under consideration: WEIGHTING COST OPTION A: Debt 20% 5% Preferred 10% 10% Common 70% 14% OPTION B: Debt 30% 5.5% Preferred 10% 10.5% Common 60% 15% OPTION C: Debt 40% 6% Preferred 10% 10.7% Common 50% 15.8% OPTION D: Debt 50% 8% Preferred 10% 11.2% Common 40% 17.5% Which of the plans has the lowest weighted average cost of capital?

ANSWER:

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