Question

For risk-specific projects, we typically analyze other firms that are already in the new market where we are moving to infer our WACC. This is called a:

Answer 1

The correct answer to this is pure play.

Step-by-step explanation:

Pure play is a method ,which is used to determine the beta coefficient , for a company which is not traded publicly. This approach is also used to calculate the cost of capital for a project, that is different from the mainstream business that a company is in. Here the cost of capital can be determined by taking out the levering ( both un and re levering ) beta coefficient of pure play. While a pure play company is said to be that company which focuses only on the product which it specializes in.