What does the term “value of an unlevered firm” mean?

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What does the term “value of an unlevered firm” mean?

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What does the term “value of an unlevered firm” mean?

Explanation & AnswerSolution by a verified expert

Explanation

An unlevered firm is a firm that has no debt, and the financing is done solely through equity. Such firms have no financial leverage. The value of such a firm will be equivalent to the value of the equity capital only.

Verified Answer

The value of a firm when it has no debt in its capital structure, refers to the unlevered value of the firm.

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