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Verano Inc

question 94

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 11% and the waste water clean-up business has a cost of equity capital of 6%.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?


Definitions:

Disposable Income

Financial means left for households to spend and save after income tax obligations.

APC

Average Propensity to Consume refers to the ratio of consumption expenditure to income.

APC

Commonly stands for Armored Personnel Carrier, but in economic contexts, it can refer to the Average Propensity to Consume, which indicates the fraction of income that is spent on consumption.

APS

Acronym for Accumulated Plan Savings, often related to retirement saving plans; or it could also mean Anti-Phishing Security, depending on the context.

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