Up until today, your firm has had two divisions (A) and (B). Both divisions have never had any leverage and will not take on leverage in the future. Division A is expected to generate unlevered free cash flows (FCFs) of $110 million annually in perpetuity. Division B is expected to generate FCFs of $160 million annually in perpetuity. Both divisions generate the first FCF in one year from today. Suppose you are selling Division B today and pay out the cash proceeds as a dividend.

You have found the following two firms that have business risk that is comparable to that of divisions A and B, respectively: The comparable firm for Division A, called Comp A, has a market value of $224 million and always continuously rebalances to a debt-to-value ratio of 0.3. Comp A has $190 million of identifiable assets. Comp As expected return on debt is 2%, and its expected return on equity is 9%. The comparable firm for Division B, called Comp B, has a market value of $320 million, and always continuously rebalances to a debt-to-value ratio of 0.6. Comp B has $240 million of identifiable assets. Comp Bs expected return on debt is 6% and its expected return on equity is 14%. The market risk premium is 5% and the risk-free rate is 2%. Assume that the CAPM holds. The corporate tax rate is 25%. What is your firms weighted average cost of capital going forward?