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For any accountant or accounting professor available:
Division Asset Beta Next Period’s Expected Free Cash Flow ($mm) Expected Growth rate
Oil Exploration 1.4 450 4.0%
Oil Refining 1.1 525 2.5%
Gas & Convenience Stores 0.8 600 3.0%

The risk free rate of interest is 3% and the market risk premium is 5%. what is the cost of capital for the oil refining division closest to?
A) 6.5%
B) 7.0%
c) 8.5%
D) 10.0%