Project-specific cost of capital

When a proposed activity differs materially from the company's existing business, its current WACC may misprice the project. A comparable listed business can provide a starting equity beta. Remove that business's gearing effect to estimate asset beta, then apply the intended gearing to obtain a project equity beta. CAPM gives the corresponding cost of equity; where a combined debt-and-equity rate is needed, calculate WACC consistently. Proxy companies may have mixed activities or different operational risks, so the procedure is an estimate requiring judgement, not an automatic proof of the correct rate.