The market value of Cayetano Company's common stock $($book value: P$65$ million$)$ is projected to be P$60$ million. In contrast, the market value of its interest$-$bearing debt $($book value: P$35$ million$)$ is estimated to be P$40$ million. The average annual before$-$tax yield on these liabilities is $15\%.$ Income tax is $40\%.$ The company is projected to pay a P$10$ dividend per share, while the stock currently trades at P$100$ per share. Dividend growth is expected to average $2\mathrm{.}5\%$ each year. What is the weighted average cost of capital $($WACC$)$ of the company as a whole?

A$.9\%$

C$.21\mathrm{.}5\%$

B$.11\mathrm{.}1\%$

D$.25\%$

Answer rating: 100% (QA)

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