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.
The conversion from unlevered beta to levered beta is made to account for the risk ...
This solution describes the Hamada equation and illustrates its use to convert levered (or leveraged) beta to unlevered (unleveraged) beta.