: Unlevered Beta: Counts Accounting has a beta of 1.40. The tax rate is 35%, and Counts is financed with 30% debt. What is Counts' unlevered beta? Round your answer to two decimal places.

Where: B_L is the firm's beta with leverage = 1.40 T_c is the corporate tax rate = 35% D/E is the company's debt/equity ratio = 30%

1.40 / (1+ (1-0.35) * (30)

1.40 / 1.65 *(.30)

= 1.40 / 0.495 =2.83