The unlevered cost of capital is:
A)the cost of capital for a firm with no equity in its capital structure.
B)the cost of capital for a firm with no debt in its capital structure.
C)the interest tax shield times pretax net income.
D)the cost of preferred stock for an all-equity firm.
E)equal to the profit margin for a firm with some debt 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 is the required return for a project or investment assuming that the project is financed entirely with equity.

The Unlevered Cost of Capital Is