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What is the appropriate cost of capital

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Question - Verano Inc. has two business divisions-a software product line and a wastewater 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 only equity financing. What is the appropriate cost of capital to evaluate the business? Explain your reasoning and/or show your calculations.

Reference no: EM132811023

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