Which of the Following Is the Best Definition of Unlevered

question 144

Multiple Choice

Which of the following is the best definition of unlevered cost of capital (RU) ?

• A) The costs that are directly associated with bankruptcy, such as legal and administrative expenses.
• B) The cost of capital of a firm that has no debt.
• C) Theory that a firm borrows up to the point where the tax benefit from an extra dollar in debt is exactly equal to the cost that comes from the increased probability of financial
• Distress.
• D) The equity risk that comes from the nature of the firm's operating activities.
• E) The tax saving attained by a firm from interest expense.

---

Definitions:

Performance-Based Rewards

Incentives and benefits given to employees based on the quality and quantity of their work performance.

Share Options

A benefit given by a company, allowing employees to purchase company shares at a set price in the future.

Competency-Based Rewards

Incentives and recognition given to employees based on their demonstrated skills, abilities, and achievements, rather than job titles or seniority.

Employability

Refers to the skills, knowledge, and abilities that make a person suitable for a particular job or career.