Sometimes we cannot use the average beta of the projects industry as an estimate of the beta

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Sometimes we cannot use the average beta of the project’s industry as an estimate of the beta of the project. For example, a new project may not fall neatly into any existing industry. In this case, we can estimate the project’s beta by considering the project’s cyclicality of revenues and its operating leverage. This approach is qualitative.

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Corporate Finance

ISBN: 9780073105901

8th Edition

Authors: Jeffrey Jaffe, Bradford D Jordan

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