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 4.8%, and the market-risk premium is 5.8%. 11.52% 9.60% 4.80% 12.92% 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 2.0, because it will be iskler than the firm's real estate division 17.75% 16.40% 18.90% 17.35% 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, 9.44% so its best to be The distribution division will have less risk than the firm's real estate division, so its beta is expected to be 0.8. O 9.44% 17.15% 18.35% 18.45% This means that the distribution division's cost of capital will be: Wizard Co, expects 55% of its total value to end up in the real estate division, 20% in the consulting division, and 25% in the distribution division. 14.05% O 17.50% 12.75% 15.60% Based on this information, what rate of return should its investors require once it opens the new divisions? The calculation of WACC involves calculating the weighted average of the required rates of return on debt and equity, where the weights equal the percentage of each type of financing in the firm's overall capital structure. is the symbol that represents the before-tax cost of debt in the weighted average cost of capital (WACC) rd in. r's re rps Raymond Co. has $1.1 million of debt, $1 million of preferred stock, and $1.8 million of common equity. What would be its weight on debt? O 0.21 0.28 O 0.46 O 0.29