Evans Technology has the following capital structure.

Debt $35\%$

Common equity $65$

The aftertax cost of debt is $8\mathrm{.}50$ percent, and the cost of common equity $($in the form of retained earnings$)$ is $15\mathrm{.}50$ percent.

What is the firm$$s weighted average cost of capital?

Note: Do not round intermediate calculations. Input your answers as a percent rounded to $2$ decimal places.

An outside consultant has suggested that because debt is cheaper than equity, the firm should switch to a capital structure that is $50$ percent debt and $50$ percent equity.

Under this new and more debt$-$oriented arrangement, the aftertax cost of debt is $9\mathrm{.}50$ percent, and the cost of common equity $($in the form of retained earnings$)$ is $17\mathrm{.}50$ percent.

Recalculate the firm's weighted average cost of capital.

Note: Do not round intermediate calculations. Input your answers as a percent rounded to $2$ decimal places.

Which plan is optimal in terms of minimizing the weighted average cost of capital?

multiple choice

Plan A

Plan B