In the APV Approach,why Is the Unlevered Cost of Equity

question 4

Multiple Choice

In the APV approach,why is the unlevered cost of equity used instead of the WACC?

• A)To account for retained earnings risk.
• B)To avoid measuring the impact of debt.
• C)To value the company as if it were all equity financed.
• D)To incorporate the risk of newly issued shares.

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Definitions:

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