Verano Ltd

question 101

Multiple Choice

Verano Ltd. has two business divisions - a software product line and a waste water clean-up product line. The software business has a cost of equity capital of 10% and the waste water clean-up business has a cost of equity capital of 7%. Verano has 50% of its revenue from software and the rest from the waste water business. Verano is considering a purchase of another company in the waste water business using equity financing. What is the appropriate cost of capital to evaluate the business?

• A) 8.5%
• B) 10%
• C) 9%
• D) 7%

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Definitions:

Behavioral Objectives

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A teaching method that involves the straightforward transmission of information from an instructor to a student, typical in traditional educational settings.

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A teaching method that involves engaging students in the learning process directly through activities and/or discussion in class, rather than passively listening to an expert.

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