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The amount of alcohol in beer depends upon the amount of sugar consumed by the yeast. This is calculated from the difference between the specific gravity at the beginning (original gravity; OG) and end of fermentation (final gravity; FG).
There are several different formulas for calculating alcohol. The Wikipedia Alcohol by volume page has two simple formulas. There are also formulas that may be more accurate for high gravity beers. Formula #3 from the Wikipedia ABV page is for alcohol concentrations above 6%. Formula #4 is based on real extract calculations that make adjustments based on the effects of alcohol on the gravity readings.
The results from these formulas are similar. Homebrewers may find these differences to be trivial, but these small differences are important for professional brewers who must pay taxes based on alcohol.
Be sure to use corrected specific gravity values if your specific gravity measurements are taken at a temperature higher than 60F (15.5C; the standard temperature calibration of most hydrometers). Calculations for dilution or freeze distillation (eisbier) are available at the eisbier alcohol page.
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