Single Business Project Risk similar within business

When a firm operates in only one business and all projects within that business share the same risk profile, the firm can use its overall cost of equity as the cost of equity for the project. Since we estimated the cost of equity using a beta for the firm in the last chapter, this would mean that we would use the same beta to estimate the cost of equity for each project that the firm analyzes. The advantage of this approach is that it does not require risk estimation prior to every project, providing managers with a fixed benchmark for their project investments. The approach is restricting, though, since it can be usefully applied only to companies that are in one line of business and take on homogeneous projects.

Retirement Planning For The Golden Years

Retirement Planning For The Golden Years

If mutual funds seem boring to you, there are other higher risk investment opportunities in the form of stocks. I seriously recommend studying the market carefully and completely before making the leap into stock trading but this can be quite the short-term quick profit rush that you are looking for if you am willing to risk your retirement investment for the sake of increasing your net worth. If you do choose to invest in the stock market please take the time to learn the proper procedures, the risks, and the process before diving in. If you have a financial planner and you definitely should then he or she may prove to be an exceptional resource when it comes to the practice of 'playing' the stock market.

Get My Free Ebook


Post a comment