In Order to Value a Project Which Is Not Scale

question 35

Multiple Choice

In order to value a project which is not scale enhancing you need to:

• A) typically calculate the equity cost of capital using the risk adjusted beta of another firm in the industry before calculating the WACC.
• B) typically increase the beta of another firm in the same line of business and then calculate the discount rate using the SML.
• C) typically you can simply apply your current cost of capital.
• D) discount at the market rate of return since the project will diversify the firm to the market.
• E) typically calculate the equity cost of capital using the risk adjusted beta of another firm in another industry before calculating the WACC.

---

Definitions:

Soil Surrounding

The layer of the Earth's crust that covers its surface, in which plants grow and where various organisms can live.

Asbestosis

A lung disease resulting from the inhalation of asbestos particles, characterized by fibrosis of the lungs and difficulty in breathing.

Restaurant Owner

An individual who owns and oversees the operation of a restaurant.

Respiratory Illnesses

Diseases affecting the lungs and other parts of the respiratory system, ranging from mild colds to life-threatening conditions like pneumonia.