Explore BrainMass

Using The Hamada Equation To Find Unlevered Beta

Harley Motors has $ 10 million in assets, which were financed with $ 2 million of debt and $ 8 million in equity. Harley's beta is currently 1.2, and its tax rate is 40%. Use the Hamada equation to find Harley's unlevered beta, bU.

Solution Preview

The conversion from unlevered beta to levered beta is made to account for the risk ...

Solution Summary

This solution describes the Hamada equation and illustrates its use to convert levered (or leveraged) beta to unlevered (unleveraged) beta.