Unlevered Beta Calculator

✖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]			+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%

✖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]

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Formula

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Unlevered Beta

Formula

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

Example

`"0.300412"="0.73"/(1+((1-"0.35")*("22000"/"10000")))`

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Unlevered Beta Solution

STEP 0: Pre-Calculation Summary

Formula Used

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

β_UL = β_L/(1+((1-t)*(D/E))) --> 0.73/(1+((1-0.35)*(22000/10000)))

Evaluating ... ...

β_UL = 0.300411522633745

STEP 3: Convert Result to Output's Unit

0.300411522633745 --> No Conversion Required

FINAL ANSWER

0.300411522633745 ≈ 0.300412 <-- Unlevered Beta

(Calculation completed in 00.004 seconds)

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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

Unlevered Beta Formula

Unlevered Beta = Levered Beta/(1+((1-Tax Rate)*(Debt/Equity)))
β_UL = β_L/(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 β_UL symbol.

How to calculate Unlevered Beta using this online calculator? To use this online calculator for Unlevered Beta, enter Levered Beta (β_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 β_UL = β_L/(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 (β_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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