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please answer all they are all connected. A firm's cost of capital is often a reflection of its activities and funding needs. Consider the case
please answer all they are all connected.
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, currentiy has only a real estate division and uses only equity capital; however, it is considering creating consulting and distribution divisions, Its beta is currently 1.5. The risk-free rate is 4.8%, and the market risk premlum is 5.2%. This means that the firm's real estate division will have a cost of capital of: 2.4096 9.60% 12.00% 12.50% The consulting division is expected to have a beto of 2.2, because it will be riskler than the firm's real estate division. This means that the firm's consulting division will have a cost of capital of: 18.74% 17.59% 17.19% 16.24% The distribution division will have less risk than the firm's real estate division, so its beta is expected to be 0.6. This means that the distribution division's cost of capital will be: 18.19% 7.92% 16.99% 18.29% Wizard C0. expects 60% of its total value to end up in the real estate division, 25% in the consuling division, and 15% in the distribution division. Based on this information, what rate of return should its investors require once it opens the new divislons? (Note: Round your intermediate calculations to two decimal places.) 15.66% 17.56% 12.81% 14.11% Step by Step Solution
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