Enter the total unlevered beta, tax rate, debt, and equity into the calculator. The calculator will evaluate and display the levered beta.
- Debt to Equity Ratio Calculator
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- Unlevered Beta Calculator
Levered Beta Formula
The following equation is used to calculate a levered beta.
Levered Beta = Unlevered Beta * [1 + (1 – T) * (D / E)]
- Where T is the tax rate (%)
- D is the total debt
- E is the total equity
Levered Beta Definition
Levered beta is a measure of a risk of a companies stock when analyzing the rate of return of a stock using CAPM. It takes into account the companies debt to equity ratio in order to come up with a risk factor that can be used as an investing metric.
Levered Beta Example
How to calculate levered beta?
- First, determine the tax rate.
Determine the effective tax percentage.
- Next, determine the total debt.
Calculate the total debt.
- Next, determine the total equity.
Calculate the total equity.
- Finally, calculate the levered beta.
Calculate the levered beta using the formula above.
Levered beta is a measure of risk of a stock or business based on their tax rate, total debt, and total equity.