Question: Wizard Co. currently has only a real estate division and uses only equity capital; however, it is considering creating consulting and distribution divisions. Its beta

Wizard Co. currently has only a real estate division and uses only equity capital; however, it is considering creating consulting and distribution divisions. Its beta is currently 1.3. The risk-free rate is 4.2%, and the market risk premium is 6.4%. This means that the firm's real estate division will have a cost of capital of: 8.40% 9.66% 12.52% 2.94% You 4 seconds ago The consulting division is expected to have a beta of 1.9, because it will be riskier than the firm's real estate division. This means that the firm's consulting division will have a cost of capital of: 16.36% 17.71% 17.31% 18.86% The distribution division will have less risk than the firm's real estate division, so its beta is expected to be 0.8. This means that the distribution division's cost of capital will be: 18.31% 18.41% 9.32% 17.11%

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