Cost of capital represent the return of an alternative investment which is equivalent to an investment in the enterprise to be valued in terms of duration, risk and taxation of the cash flows. This is described as the discount rate.Raw beta: In practice, the historical factor arrived at by means of linear regression is referred to as “raw beta”. Raw beta takes both systemic risk and financing risk into account.Unlevered beta: “Delevering” adjusts raw beta to remove the influence of financing risk by factoring out the debt ratio of the underlying company / peer group. The result of this process is unlevered or asset beta. When performing the valuation, it must be adjusted again to reflect the financing structure of the enterprise being valued (“relevered”). When making these computations, care must be taken to ensure that the debt ratio is always determined based on market value and not book value.