3.3.2 Identifying a Project Rate

It is not recommended that practitioners calculate a Discount Rate, from first principles of CAPM, for each project, except for particularly large projects or those with unique Systematic Risks.  At least in the initial project analysis, it is recommended that practitioners adopt a broad "risk band" approach based on the type of project under consideration.

To assist practitioners in identifying the Project Rate a table (refer Table 2 below) has been developed to provide the appropriate Project Rate based on the type of project being considered according to a broad "risk band" with associated risk (asset) premiums.

Jurisdictions may allow for practitioners to determine specific market risk premium based upon current market data.