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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1.Easy
βr (%)SMLrf​ = 1%β = 1rm​ = 6.5%β = 1.1re​ = ?

The risk-free rate is 1%, the expected market return is 6.5% and a share has a beta of 1.1. Use CAPM to find the required return on the share re.

rf = 1%rm = 6.5%β = 1.1
re = %
2.Easy
βr (%)SMLrf​ = 3.5%β = 1rm​ = 8.5%β = 1.5re​ = ?

The risk-free rate is 3.5%, the expected market return is 8.5% and a share has a beta of 1.5. Use CAPM to find the required return on the share re.

rf = 3.5%rm = 8.5%β = 1.5
re = %
3.Medium
WACC = ?equityEre​ = 8%debtD = 0.75·Erd​ = 6%T = 21%

A company has a debt-to-equity ratio (at market values) of 0.75. Its cost of equity is 8%, its pre-tax cost of debt is 6% and the tax rate is 21%. Find the WACC.

D/E = 0.75re = 8%rd = 6%T = 21%
WACC = %
4.Medium
WACC = ?equity€12 000 000re​ = 10%debt€6 000 000rd​ = 3%T = 30%

A company has equity worth €12 000 000 and debt worth €6 000 000. Its cost of equity is 10%, its pre-tax cost of debt is 3% and the tax rate is 30%. Find the WACC.

E = €12 000 000D = €6 000 000re = 10%rd = 3%T = 30%
WACC = %
5.Hard
WACC = ?equity4 000 000 × €58.00β = 1.3rf​ = 4%, rm​ = 9%debt5 000 × €960rd​ = 5%T = 28%

A company has 4 000 000 shares at €58.00 each and 5 000 bonds trading at €960 each. The pre-tax cost of debt is 5% and the tax rate is 28%. The share’s beta is 1.3, the risk-free rate 4% and the market return 9%. Find the WACC.

β = 1.3rf = 4%rm = 9%rd = 5%T = 28%
WACC = %
6.Hard
WACC = ?equity5 000 000 × €54.00D0​ = €2.30g = 5%debt€81 000 000rd​ = 3%T = 28%

A company has 5 000 000 shares trading at €54.00; the book value of its equity is €162 000 000. It just paid a dividend of €2.30 per share, and dividends grow by 5% per year. Its debt has a market value of €81 000 000 and a pre-tax cost of 3%. The tax rate is 28%. Find the WACC, using the dividend growth model for the cost of equity.

N = 5 000 000P0 = €54.00book equity = €162 000 000D0 = €2.30g = 5%D = €81 000 000rd = 3%T = 28%
WACC = %

Answer key

  1. 1. re = 7.05 %
  2. 2. re = 11 %
  3. 3. WACC = 6.603 %
  4. 4. WACC = 7.367 %
  5. 5. WACC = 10.36 %
  6. 6. WACC = 7.785 %

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