and the market risk premium that should be employed in calculating the cost of

CAPM uses risk-free rate of return, market risk premium (the rate above the historical risk-free rate that will attract investors to a risky investment)and the investment’s Beta (relative risk of an investment compared to other risky assets).

Based on the inputs into the formula, it would not matter what the investment is under consideration. The CAPM takes the premium over the risk-free rate that would entice someone to invest in something else and multiples that by the specific risk associated wit the potential investment/project. The product of these 2 amounts is then added to the estimated future risk-free rate. The total equals the potential return on an investment or project.
Regardless of what is being invested, the formula helps to determine if the potential return is greater than the “safe” risk-free return.
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