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%
E) 6.5%
Correct Answer:
Verified
Correct Answer:
Verified
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