CAPM & WACC worksheet with answers

Free printable CAPM & WACC worksheet: 6 problems from easy to exam level, with an answer key. Print it or save it as a PDF.

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Name: ____________________   Date: ____________

1.Easy
βr (%)SMLrf​ = 2.5%β = 1rm​ = 9.5%β = 1.2re​ = ?

The risk-free rate is 2.5%, the expected market return is 9.5% and a share has a beta of 1.2. Use CAPM to find the required return on the share re.

rf = 2.5%rm = 9.5%β = 1.2
re = %
2.Easy
years0123…9Pp​ = €74€8.00€8.00€8.00…rp​ = ?

A company's preferred shares pay a fixed dividend of €8.00 per year and trade at €74. The tax rate is 25%. Find the cost of preferred stock rp.

Dp = €8.00Pp = €74T = 25%
rp = %
3.Medium
WACC = 7.86%equity€3 000 000re​ = ?debt€3 000 000rd​ = 5%T = 25.8%

A company has equity worth €3 000 000 and debt worth €3 000 000. Its WACC is 7.86%, its pre-tax cost of debt is 5% and the tax rate is 25.8%. Find the cost of equity re.

E = €3 000 000D = €3 000 000WACC = 7.86%rd = 5%T = 25.8%
re = %
4.Medium
WACC = ?equity€8 000 000re​ = 8%debt€5 000 000rd​ = 3.5%T = 30%

A company has equity worth €8 000 000 and debt worth €5 000 000. Its cost of equity is 8%, its pre-tax cost of debt is 3.5% and the tax rate is 30%. Find the WACC.

E = €8 000 000D = €5 000 000re = 8%rd = 3.5%T = 30%
WACC = %
5.Hard
WACC = ?equity5 000 000 × €43.00D0​ = €1.20g = 5%debt€215 000 000rd​ = 6%T = 21%

A company has 5 000 000 shares trading at €43.00; the book value of its equity is €107 500 000. It just paid a dividend of €1.20 per share, and dividends grow by 5% per year. Its debt has a market value of €215 000 000 and a pre-tax cost of 6%. The tax rate is 21%. Find the WACC, using the dividend growth model for the cost of equity.

N = 5 000 000P0 = €43.00book equity = €107 500 000D0 = €1.20g = 5%D = €215 000 000rd = 6%T = 21%
WACC = %
6.Hard
WACC = ?equity€15 000 000re​ = 11%bonds2 000 × €1 036coupon 5%, n = 4T = 21%

A company has equity with a market value of €15 000 000 and a cost of equity of 11%. Its debt consists of 2 000 bonds (face value €1 000, annual coupon 5%, 4 years to maturity) that trade at €1 036 each. The tax rate is 21%. Find the WACC, using the yield to maturity of the bonds as the pre-tax cost of debt.

E = €15 000 000re = 11%bonds: 2 000 × €1 036coupon = 5%n = 4T = 21%
WACC = %

Answer key

  1. 1. re = 10.9 %
  2. 2. rp = 10.81 %
  3. 3. re = 12.01 %
  4. 4. WACC = 5.865 %
  5. 5. WACC = 6.335 %
  6. 6. WACC = 10.05 %

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