h 09: Assignment - The Cost of Capital The distribution division will have less risk than the firm's real estate division, so its beta is expected to be 0.7. This means that the distribution division's cost of capital will be: O 19.69% 8.68% 18.39% 19.59% division, and 10% in the division 2016 in the 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 4.2%, and the market risk premium is 6.4%