Unlevered Cost Of Capital
An evaluation that uses either a hypothetical or actual debt-free scenario when measuring the cost to a firm to implement a particular capital project. The unlevered cost of capital should illustrate that it is a cheaper alternative than a levered cost of capital investment program. A variation of the cost of capital calculation. Investopedia Says:
Unlevered cost of capital will be a cheaper alternative to a levered cost of capital investment, as there are higher costs associated with the issuing of debt or preferred equity. Some of these marginal costs include, but are not limited, underwriting costs, brokerage fees, and dividend and coupon payments. Related Terms:
Cost Of Capital
Cost Of Debt
Debt-To-Capital Ratio
Deleverage
Leverage
Return On New Invested Capital - RONIC
Shareholder Value Added - SVA
Weighted Average Cost Of Capital - WACC |