If a firm is financing a project having beta: 2 by debt equivalent to a risk-free rate. What should be the cost of capital under a CAPM structure for evaluating the project? I think the interest rate of the debt would be an appropriate cost of capital
When evaluating projects, your cost of capital is based on the risk of the project.
but as the funds are raised via debt, shouldn’t the hurdle rate be the interest rate for the debt ?