Question

Lesco's is evaluating a project that has a different level of risk than the overall firm. This project should be evaluated:_______

a. Using the market beta.
b. Using the overall firm's beta.
c. Using a beta commensurate with the project's risks.
d. At the market rate of return.
e. At the T-bill rate of return.

Answer 1

Answer:

c. Using a beta commensurate with the project's risks.

Explanation:

As we know that for every kind of project the risk are differents also risk is different so the beta is also different as compared with the beta of the firm, beta of the market etc

So while evaluating a project that contains different level of risk so in this case the third option is appropriate and the same is to be considered

Hence, the c option is correct