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Sir, we can calculate a different cost of capital for projects with different financial risk (marginal cost of captial) and different business risk by Capm but what if both(business and financial) are different for a project
And can you also explain the sentence “The consequence of making the assumption that debt is risk free is that the formulae tend to overstate the financial risk in a geared company and to understate the business risk in geared and ungeared companies by a compensating amount” (formula for geared and ungeared betas)
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