Verano Inc

question 62

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) 10.0%
• B) 7.0%
• C) 8.5%
• D) 9.0%

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Definitions:

Digital Computer

An electronic device that processes information in binary form and performs computations according to programmed instructions.

Storage Decay

Storage decay refers to the theory that information fades from memory over time if it is not accessed or used, leading to forgetting.

Physical Memory Trace

Hypothetical means by which memories are stored physically in the brain.

Encoded Memory

The process of converting a perceived item of interest into a construct that can be stored within the brain and recalled later from short-term or long-term memory.