## Unlevered Beta Solution

STEP 0: Pre-Calculation Summary
Formula Used
Unlevered Beta = Levered Beta/(1+((1-Tax Rate)*(Debt/Equity)))
βUL = βL/(1+((1-t)*(D/E)))
This formula uses 5 Variables
Variables Used
Unlevered Beta - Unlevered Beta is a measure of a company's market risk without the impact of debt, reflecting the volatility of its equity compared to the overall market.
Levered Beta - Levered Beta is a measure of a company's market risk, including the impact of its debt, reflecting the volatility of its equity relative to the overall market.
Tax Rate - Tax Rate is the percentage at which an individual or corporation is taxed on their taxable income.
Debt - Debt is the amount of money borrowed by one party from another, typically with the agreement to pay back the principal amount along with interest.
Equity - Equity represents the ownership interest in a company, calculated as the difference between the company's total assets and total liabilities.
STEP 1: Convert Input(s) to Base Unit
Levered Beta: 0.73 --> No Conversion Required
Tax Rate: 0.35 --> No Conversion Required
Debt: 22000 --> No Conversion Required
Equity: 10000 --> No Conversion Required
STEP 2: Evaluate Formula
Substituting Input Values in Formula
βUL = βL/(1+((1-t)*(D/E))) --> 0.73/(1+((1-0.35)*(22000/10000)))
Evaluating ... ...
βUL = 0.300411522633745
STEP 3: Convert Result to Output's Unit
0.300411522633745 --> No Conversion Required
0.300411522633745 0.300412 <-- Unlevered Beta
(Calculation completed in 00.004 seconds)
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Created by Keerthika Bathula
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Cost of Equity = ((Dividend in Next Period/Current Share Price)+(Dividend Growth Rate*0.01))*100
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Unlevered Beta = Levered Beta/(1+((1-Tax Rate)*(Debt/Equity)))
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## Unlevered Beta Formula

Unlevered Beta = Levered Beta/(1+((1-Tax Rate)*(Debt/Equity)))
βUL = βL/(1+((1-t)*(D/E)))

## What is Unlevered Beta ?

Unlevered beta, also known as asset beta, is a measure of the systematic risk of a company's assets, independent of its capital structure. It reflects the volatility of a company's equity relative to the overall market, assuming the company has no debt. This metric is crucial for comparing the intrinsic risk of firms within the same industry, as it removes the effects of leverage (debt), thereby providing a clearer picture of the business risk. Investors and analysts use unlevered beta to assess the risk of a company's core operations and to make more accurate comparisons between companies with different debt levels. Calculating unlevered beta involves adjusting the company's levered beta (which includes debt) by removing the effects of financial leverage. This adjustment helps in understanding the pure business risk without the influence of the company’s financial structure.

## How to Calculate Unlevered Beta?

Unlevered Beta calculator uses Unlevered Beta = Levered Beta/(1+((1-Tax Rate)*(Debt/Equity))) to calculate the Unlevered Beta, The Unlevered Beta measures a company's market risk without considering its debt, indicating the volatility of its equity relative to the overall market. Unlevered Beta is denoted by βUL symbol.

How to calculate Unlevered Beta using this online calculator? To use this online calculator for Unlevered Beta, enter Levered Beta L), Tax Rate (t), Debt (D) & Equity (E) and hit the calculate button. Here is how the Unlevered Beta calculation can be explained with given input values -> 0.622159 = 0.73/(1+((1-0.35)*(22000/10000))).

### FAQ

What is Unlevered Beta?
The Unlevered Beta measures a company's market risk without considering its debt, indicating the volatility of its equity relative to the overall market and is represented as βUL = βL/(1+((1-t)*(D/E))) or Unlevered Beta = Levered Beta/(1+((1-Tax Rate)*(Debt/Equity))). Levered Beta is a measure of a company's market risk, including the impact of its debt, reflecting the volatility of its equity relative to the overall market, Tax Rate is the percentage at which an individual or corporation is taxed on their taxable income, Debt is the amount of money borrowed by one party from another, typically with the agreement to pay back the principal amount along with interest & Equity represents the ownership interest in a company, calculated as the difference between the company's total assets and total liabilities.
How to calculate Unlevered Beta?
The Unlevered Beta measures a company's market risk without considering its debt, indicating the volatility of its equity relative to the overall market is calculated using Unlevered Beta = Levered Beta/(1+((1-Tax Rate)*(Debt/Equity))). To calculate Unlevered Beta, you need Levered Beta L), Tax Rate (t), Debt (D) & Equity (E). With our tool, you need to enter the respective value for Levered Beta, Tax Rate, Debt & Equity and hit the calculate button. You can also select the units (if any) for Input(s) and the Output as well.
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