A company determines its unlevered beta by taking the equity beta (or levered beta) and unlevering it. This is done to remove the financial effects of leverage, thus reflecting the risk of the company's assets themselves, rather than the risk of the company's equity. The formula to calculate unlevered beta is: Unlevered Beta = Levered Beta / (1 + ((1 - Tax Rate) * (Debt/Equity))).

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The Weighted Average Cost of Capital (WACC) has significant implications for a company's financial strategy. It represents the average rate a company should pay to finance its assets. Therefore, it can influence decisions about capital structure, investment, and risk management. A higher WACC indicates that a company is more volatile and riskier than the market average, which may require a more conservative financial strategy. Conversely, a lower WACC suggests that a company is less risky, potentially allowing for more aggressive investment strategies.

The unlevered beta contributes to the risk assessment of a company by indicating its volatility and risk level compared to the market average. A higher unlevered beta means that a company is more volatile and riskier than the market average, while a lower unlevered beta means that a company is less risky.

Investing in a company with a low unlevered beta may seem less risky as it indicates that the company's returns are less volatile compared to the market. However, potential risks could include lower returns as these companies may not provide high growth rates. Additionally, a low unlevered beta doesn't necessarily mean the company is immune to market or economic downturns. It's also important to consider other factors such as the company's financial health, industry position, and future growth prospects.

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