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`beta_L = beta_U [1+(1- T ) phi ]`

Enter a value for all fields

The **Hamada's Equation** calculator computes levered beta (**β _{L}**) for a business based on the unlevered beta (

**INSTRUCTIONS:** Enter the following:

- (
**B**) Un-leveraged beta._{U} - (
**T**) Tax percentage. - (
**φ**) Leverage (debt to equity ratio:**CLICK HERE)**.

**Leveraged Beta (B _{L}):** The calculator returns the leveraged beta (B

Hamada's equation is used to separate the financial risk of a levered firm from its business risk. The equation combines Modigliami-Miller therom with the capital asset pricing model. It is used to help determine the levered beta, and, through this, the optimal capital structure of firms. It relates the beta of a levered firm (a firm financed by debt and equity) to that of its unlevered (a firm which has no debt) counterpart. It is used to determine the cost of capital of a levered firm based on the cost of capital of comparable firms. The equation is: `beta_L=beta_U[1+(1-T)phi]`, where:

- β
_{U}= levered beta - β
_{L}= unlevered beta - T = tax rate (as a percentage)
**φ**= leverage or debt to equity ratio

Wikipedia (https://en.wikipedia.org/wiki/Hamada%27s_equation)