Verano Inc

question 39

Multiple Choice

Verano Inc.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)10%
• B)7%
• C)8.5%
• D)9%

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