Neas-Seminars

levered firm


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By PS - 12/30/2007 8:33:31 PM

On page 474 of the 9th edition text book,they have given that the firm U is unlevered. Does this mean that the firm has not borrowed anything?

Could you please explain what does the term unlevered mean?

[NEAS: Unlevered mean no debt; financed entirely by equity. If the firm is unlevered (no debt), the return on assets = the return on equity = the opportunity cost of capital.]