ABC Corp. has a return on common equity of 77%. It has a financial leverage of 60% and an after-tax net borrowing cost of 5% on $150 million of net financial obligation. The firm is considering repurchasing $50 million of its stock and financing the repurchase with further borrowing at a 5% after-tax borrowing cost. What will be the firms return on common equity after this transaction if the same level of operating profitability is maintained?

85%

95%

87.75%

92.5%

None of the above