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 agoRelated Solutions
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