Benson's, Inc. has an overall cost of equity of 10.24 percent and a beta of 1.2. The firm is financed 100 percent with common stock. The risk-free rate of return is 4 percent. What is an appropriate cost of capital for a division within the firm that has an estimated beta of 1.5?
◦ 11.6 percent
◦ 11.8 percent
◦ 12.0 percent
◦ 12.4 percent
◦ 12.8 percent