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 4.2%, and the market risk premium is 6.4%. This means that the firm's real estate division will have cost of capital of: O 2.52% O 13.16% O 10.08% O 8.40%
