Cayo Company Is Financed Entirely by Common Stock Which Is

question 61

Multiple Choice

Cayo Company is financed entirely by common stock which is priced to offer a 10% return.If the company repurchases 40% of the stock and substitutes an equal value of debt costing 7%, what is the cost on the common stock after repurchasing?

• A)10%
• B)18%
• C)12%
• D)None of the above