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Levered Beta Formula

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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. Check FAQs

β L = β UL \cdot (1 + ((1 - t) \cdot (\frac{D}{E})))

β_L - Levered Beta?β_UL - Unlevered Beta?t - Tax Rate?D - Debt?E - Equity?

Levered Beta Example

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With units

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Here is how the Levered Beta equation looks like with Values.

Here is how the Levered Beta equation looks like with Units.

Here is how the Levered Beta equation looks like.

0.729 = 0.3 \cdot (1 + ((1 - 0.35) \cdot (\frac{22000}{10000})))

0.729 = 0.3 \cdot (1 + ((1 - 0.35) \cdot (\frac{22000}{10000})))

0.729 = 0.3 \cdot (1 + ((1 - 0.35) \cdot (\frac{22000}{10000})))

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Levered Beta Solution

Follow our step by step solution on how to calculate Levered Beta?

FIRST Step Consider the formula

β L = β UL \cdot (1 + ((1 - t) \cdot (\frac{D}{E})))

Next Step Substitute values of Variables

∴

β L = 0.3 \cdot (1 + ((1 - 0.35) \cdot (\frac{22000}{10000})))

Next Step Prepare to Evaluate

∴

β L = 0.3 \cdot (1 + ((1 - 0.35) \cdot (\frac{22000}{10000})))

LAST Step Evaluate

∴

β L = 0.729

Levered Beta Formula Elements

Variables

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.

Symbol: β_L

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Levered Beta

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.

Symbol: β_UL

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Unlevered Beta

Tax Rate

Tax Rate is the percentage at which an individual or corporation is taxed on their taxable income.

Symbol: t

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Tax Rate

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.

Symbol: D

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Debt

Equity

Equity represents the ownership interest in a company, calculated as the difference between the company's total assets and total liabilities.

Symbol: E

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Equity

Other formulas in Strategic Financial Management category

Go Earnings Yield

EY = (\frac{EPS}{MPS}) \cdot 100

Go Earnings Yield using PE Ratio

EY = (\frac{1}{PE}) \cdot 100

Go Dividend Rate

DR = (\frac{DPS}{CP}) \cdot 100

Go Share Exchange Ratio

ER = \frac{OPTS}{ASP}

How to Evaluate Levered Beta?

Levered Beta evaluator uses Levered Beta = Unlevered Beta*(1+((1-Tax Rate)*(Debt/Equity))) to evaluate 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 evaluate Levered Beta using this online evaluator? To use this online evaluator for Levered Beta, enter Unlevered Beta (β_UL), Tax Rate (t), Debt (D) & Equity (E) and hit the calculate button.

FAQs on Levered Beta

What is the formula to find Levered Beta?

The formula of Levered Beta is expressed as Levered Beta = Unlevered Beta*(1+((1-Tax Rate)*(Debt/Equity))). Here is an example- 0.729 = 0.3*(1+((1-0.35)*(22000/10000))).

How to calculate Levered Beta?

With Unlevered Beta (β_UL), Tax Rate (t), Debt (D) & Equity (E) we can find Levered Beta using the formula - Levered Beta = Unlevered Beta*(1+((1-Tax Rate)*(Debt/Equity))).

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Levered Beta Formula

Levered Beta Example

Levered Beta Solution

Levered Beta Formula Elements

Other formulas in Strategic Financial Management category

How to Evaluate Levered Beta?

FAQs on Levered Beta

Variable Name