Unlevered Cost Of Equity
of 10%, a corporate tax rate (t) of 25%, and a debt-to-equity ratio (D/E) of 0.5. First, we calculate the unlevered beta: βu = 1.2 / [1 + (1 - 0.25) 0.5] = 0.96 Then, we calculate the unlevered cost of equity: Ru = 0.05 + 0.96 (0.10 - 0.05) = 0.098 or 9.8% Therefore, the