Asset beta

Asset beta helps compare businesses with different financing structures. Under the standard tax-adjusted formula and an assumed zero debt beta, beta_asset = beta_equity × E/[E + D(1 − T)], using market values. If debt has material systematic risk, use the fuller formula including debt beta. The result can be regeared to the project's intended financing mix to estimate its equity beta and cost of equity. An asset beta describes systematic exposure rather than the total volatility of accounting asset values, and its accuracy depends on comparable-business and financing assumptions.