Levered Beta Calculator

✖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.ⓘ Unlevered Beta [β_UL]			+10% -10%
✖Tax Rate is the percentage at which an individual or corporation is taxed on their taxable income.ⓘ Tax Rate [t]			+10% -10%
✖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.ⓘ Debt [D]			+10% -10%
✖Equity represents the ownership interest in a company, calculated as the difference between the company's total assets and total liabilities.ⓘ Equity [E]			+10% -10%

✖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.ⓘ Levered Beta [β_L]

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Formula

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Levered Beta

Formula

`"β"_{"L"} = "β"_{"UL"}*(1+((1-"t")*("D"/"E")))`

Example

`"0.729"="0.3"*(1+((1-"0.35")*("22000"/"10000")))`

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Levered Beta Solution

STEP 0: Pre-Calculation Summary

Formula Used

Levered Beta = Unlevered Beta*(1+((1-Tax Rate)*(Debt/Equity)))
β_L = β_UL*(1+((1-t)*(D/E)))
This formula uses 5 Variables

Variables Used

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.
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.
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

Unlevered Beta: 0.3 --> 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

β_L = β_UL*(1+((1-t)*(D/E))) --> 0.3*(1+((1-0.35)*(22000/10000)))

Evaluating ... ...

β_L = 0.729

STEP 3: Convert Result to Output's Unit

0.729 --> No Conversion Required

FINAL ANSWER

0.729 <-- Levered Beta

(Calculation completed in 00.004 seconds)

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Credits

Created by Keerthika Bathula

Indian Institute of Technology, Indian School of mines, Dhanbad (IIT ISM Dhanbad), Dhanbad

Keerthika Bathula has created this Calculator and 50+ more calculators!

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< 18 Strategic Financial Management Calculators

Money Market Discount Rate

Go Money Market Discount Rate = (Year/Days of Maturity)*(Face Value of Money Market Instrument-Present Value of Money Market Instrument)/Face Value of Money Market Instrument

Effective Convexity

Go Effective Convexity = (Price of Bond When Yield is Decreased+Price of Bond When Yield is Increased-(2*Initial Price of Bond))/((Change in Curve)^2*Initial Price of Bond)

Add on Rate

Go Add on Rate = ((Year/Days)*((Amount Paid at Maturity Including Interest)-Present Value of Money Market Instrument)/(Amount Paid at Maturity Including Interest))

Change in Price of Full Bond

Go Percentage Change in Price of Bond = (-Annual Modified Duration*Change in Yield)+(1/2*Annual Convexity*(Change in Yield)^2)

Value of Right using New Shares

Go Value of Right = Number of New Shares*(Market Price-Issue Price of New Share)/Total Number of All Shares

Single Month Mortality

Go Single Month Morality = Prepayment for a Month/(Beginning Mortgage Balance for Month-Scheduled Principal Repayment for Month)

Value of Right

Go Value of Right per Share = (Stock Price-Right Subscription Price)/Number of Rights to Buy a Share

Cost of Equity

Go Cost of Equity = ((Dividend in Next Period/Current Share Price)+(Dividend Growth Rate*0.01))*100

Unlevered Beta

Go Unlevered Beta = Levered Beta/(1+((1-Tax Rate)*(Debt/Equity)))

Levered Beta

Go Levered Beta = Unlevered Beta*(1+((1-Tax Rate)*(Debt/Equity)))

Price Value of Basis Point

Go Price Value of Basis Point = (Price of Bond When Yield is Decreased-Price of Bond When Yield is Increased)/2

Price of Bond

Go Price of Bond = Face Value*(1+Implied Discount Rate)^Holding Period

Approximate Macaulay Duration

Go Approximate Macaulay Duration = Approximate Modified Duration*(1+Rate of Interest)

Conversion Parity Price

Go Conversion Parity Price = Value of Convertible Security/Conversion Ratio

Share Exchange Ratio

Go Exchange Ratio = Offer Price for Target's Share/Acquirer's Share Price

Earnings Yield

Go Earnings Yield = (Earnings per Share/Market Price per Share)*100

Dividend Rate

Go Dividend Rate = (Dividend per Share/Current Share Price)*100

Earnings Yield using PE Ratio

Go Earnings Yield = (1/Price-Earnings (PE) Ratio)*100

Levered Beta Formula

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

What is Levered Beta ?

Levered beta, also known as equity beta, is a measure of a company's market risk that accounts for the impact of its capital structure, including debt. It reflects the volatility of the company's equity relative to the overall market, capturing both business risk and the additional risk introduced by financial leverage. Levered beta is crucial for investors and analysts as it provides insight into how sensitive a company's stock is to market movements, factoring in the amplification of risk due to debt. This metric is used in the Capital Asset Pricing Model (CAPM) to estimate the expected return on equity, helping investors understand the risk-return profile of an investment. Higher levered beta indicates greater volatility and risk, while lower levered beta suggests less sensitivity to market changes.

How to Calculate Levered Beta?

Levered Beta calculator uses Levered Beta = Unlevered Beta*(1+((1-Tax Rate)*(Debt/Equity))) to calculate the Levered Beta, The Levered Beta measures a company's market risk, including the impact of its debt, indicating the volatility of its equity relative to the overall market. Levered Beta is denoted by β_L symbol.

How to calculate Levered Beta using this online calculator? To use this online calculator for Levered Beta, enter Unlevered Beta (β_UL), Tax Rate (t), Debt (D) & Equity (E) and hit the calculate button. Here is how the Levered Beta calculation can be explained with given input values -> 0.729 = 0.3*(1+((1-0.35)*(22000/10000))).

FAQ

What is Levered Beta?

The Levered Beta measures a company's market risk, including the impact of its debt, indicating the volatility of its equity relative to the overall market and is represented as β_L = β_UL*(1+((1-t)*(D/E))) or Levered Beta = Unlevered Beta*(1+((1-Tax Rate)*(Debt/Equity))). 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, 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 Levered Beta?

The Levered Beta measures a company's market risk, including the impact of its debt, indicating the volatility of its equity relative to the overall market is calculated using Levered Beta = Unlevered Beta*(1+((1-Tax Rate)*(Debt/Equity))). To calculate Levered Beta, you need Unlevered Beta (β_UL), Tax Rate (t), Debt (D) & Equity (E). With our tool, you need to enter the respective value for Unlevered 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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