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Can you think of a situation for a debt-financed project in which it would seem more...

Can you think of a situation for a debt-financed project in which it would seem more appropriate to use the cost of the project's debt rather than the weighted average cost of capital based on the company's current debt/equity structure?  

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Answer #1

One of the appropriate usage of cost of debt to appraise a project shall be a multinational firm who has set up a plant to manufacture a product in a foreign country for the same country. Here it would be better to use cost of debt to appraise the project because the risks that project faced shall be incprporated in the cost of debt. This shall be different than the company's WACC and total risk that firm faces over all other jurisdictions. In such a case using WACC may not be a good option.

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