Question

In: Finance

An appropriate discount rate to value projects in an unlevered company is Select one: a. The...

An appropriate discount rate to value projects in an unlevered company is

Select one:

a. The cost of debt

b. The weighted average cost of capital

c. The risk free rate of interest

d. The cost of equity

Solutions

Expert Solution

Ans - Option D. Cost of equity

An Unlvered company is a company having no debt and financed entirely with Shareholders equity. Unlevered company does not enjoy financial leverage thus they do not have cost of debt and further weighted average cost of capital.

They use Cost of equity as discount rate

jeff jeffy answered 2 years ago
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