Unlevered Cost of Capital

The unlevered cost of capital is an evaluation using either a hypothetical or actual debt-free scenario to measure a company’s cost to implement a particular capital project. The unlevered cost of capital should illustrate that the project is a less expensive alternative than a levered cost of capital investment program. Unlevered cost of capital is a variation on the cost of capital calculation. Investors may also use the unlevered cost of the capital method to determine if the company is a sound investment.