Verano Inc

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 12% and the waste water clean-up business has a cost of equity capital of 8%.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) 12%
B) 8%
C) 10%
D) 11%
E) 6%