Calculating the Beta of a project

[CFAstudier]

When calculating the Beta of a project.. after you determine the asset beta when you unlevel a pure play firms, do we use the D/E ratio of the subject firm? Or do we use the D/E ratio of the subject firm after it has raised capital to support the project OR do we use the D/E ratio of the capital being raised for the project?
Thanks!

 

[Tartaglia]

The latter two, depending on the information in the question provided. Reading 36:
“…We then consider the financial leverage of the project or company and calculate its equity risk, βL,project:”.

 

[Tartaglia]

Check out Example 11 in that reading (they use the term target D/E ratio).