A company's WACC is 9%, but a proposed project has risk similar to a pure-play peer whose asset beta implies a 12% required return. Which rate should be used to discount the project?
-
A
9%, because the firm-wide WACC always applies
-
B
10.5%, the average of the two
-
C
12%, the project-specific risk-adjusted rate
-
D
The risk-free rate plus 1%