The Unlevered Cost of Capital Is _________________

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.