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Using The Hamada Equation To Find Unlevered Beta

14-4 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 Summary

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

$2.19