Hello i would like to ask when in an APV calculation we use the ungeared cost of capital to discount the cash flows ( cost of equity calculated using asset beta) and when we use the regeared cost of capital ( cost of equity callculated using regeared equity beta) Thx a lot !
In APV we always discount at the ungeared cost of equity when calculating the base case NPV (i.e. the cost of equity calculated using the asset beta for the project).