Cost of Equity for Projects

In assessing the beta for a project, we will consider three possible scenarios. The first scenario is the one where all the projects considered by a firm are similar in their exposure to risk; this homogeneity makes risk assessment simple. The second scenario is one where a firm is in multiple businesses with different exposures to risk, but projects within each business have the same risk exposure. The third scenario is the most complicated one, where each project considered by a firm has a different exposure to risk.

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