Answer is not 8.65 or 6.55. Please provide the correct answer. Thank you.

Question 8 0/3 points A company is going to open a new division. The division will be financed with $1 million in debt and $3 million in equity. The tax rate is 15% for all firms. The risk-free rate is 1% and market portfolio return is 7%. The yield on the division's debt is 4%. The information on the relevant pure play companies is given below Pure Play Firm Beta A 1.5 B 0.8 What is the cost of equity of the new division? Debt Equity 0.6 0.2 Answer: 8.65 Question 8 0/3 points A company is going to open a new division. The division will be financed with $1 million in debt and $3 million in equity. The tax rate is 15% for all firms. The risk-free rate is 1% and market portfolio return is 7%. The yield on the division's debt is 4%. The information on the relevant pure play companies is given below Pure Play Firm Beta A 1.5 B 0.8 What is the cost of equity of the new division? Debt Equity 0.6 0.2 Answer: 8.65