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14. Company Z is currently financed entirely by common stock that is priced to offer a 15 percent expected return. If the company repurchased 25

14. Company Z is currently financed entirely by common stock that is priced to offer a 15 percent expected return. If the company repurchased 25 percent of the common stock by issuing an equal value of debt yielding 6 percent, what would be the expected return on the common stock after the refinancing? (Ignore taxes.) A. 18 percent B. 21 percent C. 15 percent D. 10.5 percent

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