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.

New worksheetPractise online with hints

For teachers: free to print, copy and use in class. Every new worksheet has new values and its own answer key. A link to ExamProblems on your course page is appreciated.

Name: ____________________   Date: ____________

1.Easy
βr (%)SMLrf​ = 3%β = 1rm​ = 8.5%β = 0.6re​ = ?

The risk-free rate is 3%, the expected market return is 8.5% and a share has a beta of 0.6. Use CAPM to find the required return on the share re.

rf = 3%rm = 8.5%β = 0.6
re = %
2.Easy
βr (%)SMLrf​ = 4%β = 1rm​ = 10.5%β = 1.5re​ = ?

The risk-free rate is 4%, the expected market return is 10.5% and a share has a beta of 1.5. Use CAPM to find the required return on the share re.

rf = 4%rm = 10.5%β = 1.5
re = %
3.Medium
WACC = ?equity€10 000 000re​ = 11%debt€6 000 000rd​ = 6%T = 25%

A company has equity worth €10 000 000 and debt worth €6 000 000. Its cost of equity is 11%, its pre-tax cost of debt is 6% and the tax rate is 25%. Find the WACC.

E = €10 000 000D = €6 000 000re = 11%rd = 6%T = 25%
WACC = %
4.Medium
βr (%)SMLrf​ = 2.5%β = 1rm​ = ?β = 2re​ = 11.5%

A share with a beta of 2 has a required return of 11.5%. The risk-free rate is 2.5%. What expected market return rm does CAPM imply?

β = 2re = 11.5%rf = 2.5%
rm = %
5.Hard
WACC = ?equity4 000 000 × €41.00β = 0.9rf​ = 3.5%, rm​ = 8%debt5 000 × €1 020rd​ = 3%T = 30%

A company has 4 000 000 shares at €41.00 each and 5 000 bonds trading at €1 020 each. The pre-tax cost of debt is 3% and the tax rate is 30%. The share’s beta is 0.9, the risk-free rate 3.5% and the market return 8%. Find the WACC.

β = 0.9rf = 3.5%rm = 8%rd = 3%T = 30%
WACC = %
6.Hard
WACC = ?equity4 000 000 × €28.50D0​ = €2.50g = 2%debt€34 200 000rd​ = 4%T = 21%

A company has 4 000 000 shares trading at €28.50; the book value of its equity is €57 000 000. It just paid a dividend of €2.50 per share, and dividends grow by 2% per year. Its debt has a market value of €34 200 000 and a pre-tax cost of 4%. The tax rate is 21%. Find the WACC, using the dividend growth model for the cost of equity.

N = 4 000 000P0 = €28.50book equity = €57 000 000D0 = €2.50g = 2%D = €34 200 000rd = 4%T = 21%
WACC = %

Answer key

  1. 1. re = 6.3 %
  2. 2. re = 13.75 %
  3. 3. WACC = 8.563 %
  4. 4. rm = 7 %
  5. 5. WACC = 7.386 %
  6. 6. WACC = 9.15 %

Full step-by-step solutions: practise this topic on examproblems.com.