how can i calculate unlevered beta of an industry?
1 Answer(s)
Binny
Yes when you just take average beta you will get the levered beta.
The formula to calculate unlevered beta is βL = βU + [1 + (1 - t)(d/e)]
T is tax rate of the company
d/e is the debt-equity ratio of the company
by doing this you eliminate the effect of debt on the capital structure of the company.
Jun 28 2013 10:13 AM
The formula to calculate unlevered beta is βL = βU + [1 + (1 - t)(d/e)]
T is tax rate of the company
d/e is the debt-equity ratio of the company
by doing this you eliminate the effect of debt on the capital structure of the company.