The unlevered cost of capital is:
A)the cost of capital for a firm with no debt in its capital structure.
B)the cost of capital for a firm with no equity in its capital structure.
C)the interest tax shield times pretax net income.
D)equal to the profit margin for a firm with some debt in its capital structure.
E)the cost of preferred stock for a firm with equal parts debt and common stock in its capital structure.

Question

Quizplus · Accepted Answer

The unlevered cost of capital is the cost of capital for a firm with no debt in its capital structure. It represents the minimum return required by investors to invest in a company, assuming that it has no debt. This cost reflects the risk associated with a company's operations and the return that investors expect to receive from investing in it.

The Unlevered Cost of Capital Is