Hamada formula

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Levered Beta is the beta that reflects a capital structure that does include debt. The Unlevered Beta is the Beta of a company without any debt. Unlevering a beta removes the financial effects from leverage.



= Failed to parse (unknown function "\huge"): {\displaystyle \huge \frac{B^L}{1+(1-T_c)*\frac{D}{E}}}

Where:

  • is the levered, published beta
  • is the companies debt
  • is the companies equity
  • is the corporate tax rate.

+ The point of the unlevered beta is to 'remove' the debt risk from a publicly known company in a sector comparable to your own company ('unlever the beta') add your own debt risk and 'lever' the beta.