The Unlevered Cost of Capital Is _________________

question 137

Multiple Choice

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 a firm with equal parts debt and common stock in its capital structure.
• E) Equal to the profit margin for a firm with some debt in its capital structure.

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Definitions:

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