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: 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 1.4. The risk-free rate is 3.6%, and the market-risk premium is 6.7%. 8.64% 12.98% 7.20% 3.60% 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 2.1, because it will be riskier than the firm's real estate division. 20.17% 17.67% 19.02% 18.62% 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 19.72% o 8.95% O 18.42% 19.62% This means that the distribution division's cost of capital will be: Wizard Co. expects 60% of its total value to end up in the real estate division, 25% in the consulting division, and 15% in the distribution division. 13.58% o 16.43% 14.88% 18.33% Based on this information, what rate of return should its investors require once it opens the new divisions