Unlevered Beta Calculator

Formula

The formula to calculate the Unlevered Beta is:

\[ \text{Unlevered Beta} = \frac{\text{Levered Beta}}{1 + (1 - t) \cdot \left(\frac{d}{e}\right)} \]

Where:

$ \text{Levered Beta} $ is the Levered Beta
$ t $ is the Tax Rate
$ d $ is the Total Debt
$ e $ is the Total Equity

What is Unlevered Beta?

Unlevered Beta is a financial metric that analyzes volatility with respect to the overall market. It does this using the levered beta, tax rate, and ratio of debt to equity. The ratio of debt to equity is the key value for this metric.

Example Calculation

Let's assume the following values:

Levered Beta = 1.5
Tax Rate (t) = 0.3
Total Debt (d) = $200,000
Total Equity (e) = $800,000

Using the formula to calculate the Unlevered Beta:

\[ \text{Unlevered Beta} = \frac{1.5}{1 + (1 - 0.3) \cdot \left(\frac{200,000}{800,000}\right)} = \frac{1.5}{1 + 0.7 \cdot 0.25} = \frac{1.5}{1 + 0.175} = \frac{1.5}{1.175} \approx 1.28 \]

The Unlevered Beta is approximately 1.28.