I understand that you add the CRP to the equity risk premium in CAPM to account for it, but in this particular question on a CFAI topic test they seem to have adjusted Beta and I cant figure out how or why:

I assume the question you have asked using the pure-play method. If itâ€™s that case. When the project is not publicly traded, you have to adjust the beta for unlevered beta by:

B_{(u,comparable) }= B_{(L, comparable) }/ [1+(1-T)(D/E_{comparable})]

B_{(levered, project)} = B_{(u,comparable) }* [1+(1-T)(D/E_{project})]

Hope this helps.

Their beta does not make any sense if these are all the numbers provided.

To get to this beta, the D/E of the project should be 4, given that the assets of Kruspa and Trutan bear the same risk (the unlevered beta is the same).

Could you send the full screenshot? Just to make sure that nothing is missing here in terms of the question.