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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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If you also want to compare your investment's performance against other opportunities, the WACC tab is the way to go. The Weighted Average Cost of Capital (WACC) tab represents the average rate a company should pay to finance its assets. At the center of WACC is the "unlevered beta". 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.
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Are you looking to determine which investment opportunities are best for your company, especially when multiple options are available? How can you tel...
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