Division	Asset Beta	Next Period's Expected Free Cash Flow ($mm)	Expected Growth Rate
Oil Exploration	1.4	450	4.0%
Oil Refining	1.1	525	2.5%
Gas & Convenience Stores	0.8	600	3.0%

The

riskminusfree

rate of interest is 3% and the market risk premium is 5%.

The cost of capital for the oil refining division is closest to:

A.

8.5%

B.

10.0%

C.

6.5%

D.

7.0%