Divisional Costs of Capital A firm's cost of capital is often a reflection of its activities and funding needs. Consider the case of Wizard Company, and answer the following questions: 6 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 1.1. The risk-free rate is 4.2%, and the market-risk premium is 6.4%. 0000 This means that the firm's real estate division will have a cost of capital of: The consulting division is expected to have a beta of 1.8, because it will be riskier than the firm's real estate division. 009 17.07% 16.67% 15.72% 18.22% This means that the firm's consulting division will have a cost of capital of The distribution division will have less risk than the firm's real estate division, so its beta is expected to be 0.8. O O O O 9.324 17.67% 17.77% 16.47% This means that the distribution division's cost of capital will be: Wizard Co. expects 70% of its total value to end up in the real estate division, 20% in the consulting division, and 10% in the distribution division OOOO Based on this information, what rate of retum should its investors require once it opens the new divisions