Free · Equity investment calculators 📈

Equity Beta & Debt Adjustment Calculator

Remove a modeled leverage effect using debt, equity and an assumed tax rate.

  • Formula & worked example
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Calculator inputs

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How to use this calculator

  1. Enter the known values in the units shown. Results update as you type.
  2. Edit a calculated value to solve backwards, or lock a value to hold it fixed.
  3. Use the worked example to check the method. Reset restores the starting fields.

Use the result with context

Results are estimates for planning and education. Confirm rates, taxes, fees, and legal requirements with the relevant institution or a qualified professional before making a financial decision.

Formula and method

An equity beta of 1.4, debt of 100, equity of 200 and an assumed tax rate of 20% give debt-to-equity of 0.5 and unlevered beta of 1.

Unlevered beta = equity beta ÷ [1 + (1 − tax rate) × debt ÷ equity]

Worked example

Enter these known values and leave the other values blank.

Levered beta (equity beta)
1.4
Total debt
100 USD
Total shareholders’ equity
200 USD
Assumed tax rate
20 %
D/E ratio
0.5 x
Unlevered beta
1

Assumptions and limitations

  • No. One minus net income divided by pre-tax income gives an effective rate. Enter the tax assumption appropriate to your leverage model. This simplified relation assumes negligible debt beta and does not adjust separately for cash or changing capital structure.
  • Use consistent units, dates and financial definitions. The calculated result follows the stated assumptions and the amounts entered.

Common questions

Is the tax rate inferred from income a marginal rate?

No. One minus net income divided by pre-tax income gives an effective rate. Enter the tax assumption appropriate to your leverage model. This simplified relation assumes negligible debt beta and does not adjust separately for cash or changing capital structure.

References

The calculation equations, inverse formulas, units, and input rules were imported from this source. Bookify provides the interface and equation solver.

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