The Delta Co

The Delta Co.owns retail stores that market home building supplies.Largo,Inc.builds single family homes in residential developments.Delta has a beta of 1.22 and Largo has a beta of 1.34.The risk-free rate of return is 4 percent and the market risk premium is 6.5 percent.What should Delta use as their cost of equity if they decide to purchase some land and create a new residential community?

A) 11.93 percent
B) 12.32 percent
C) 12.43 percent
D) 12.57 percent
E) 12.71 percent