For a project's cost of capital measured in Swiss francs, we use Swiss interest rates and beta with respect to Swiss market.

Question

Quizplus · Accepted Answer

To calculate the cost of capital for a project, we need to use a discount rate that is based on the currency of the project. Therefore, if the project is measured in Swiss francs, we would use Swiss interest rates and the project's beta with respect to the Swiss market. This is because the cost of capital represents the expected return that an investor could receive if they invested in a similar project in the same currency and market.

For a Project's Cost of Capital Measured in Swiss Francs