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​ = 1.5%β = 1rm​ = 6.5%β = 1.5re​ = ?

The risk-free rate is 1.5%, the expected market return is 6.5% and a share has a beta of 1.5. Use CAPM to find the required return on the share re.

rf = 1.5%rm = 6.5%β = 1.5
re = %
2.Easy
βr (%)SMLrf​ = 1%β = 1rm​ = 6.5%β = 1.3re​ = ?

The risk-free rate is 1%, the expected market return is 6.5% and a share has a beta of 1.3. Use CAPM to find the required return on the share re.

rf = 1%rm = 6.5%β = 1.3
re = %
3.Medium
WACC = ?equityEre​ = 12%debtD = 0.4·Erd​ = 4%T = 25.8%

A company has a debt-to-equity ratio (at market values) of 0.4. Its cost of equity is 12%, its pre-tax cost of debt is 4% and the tax rate is 25.8%. Find the WACC.

D/E = 0.4re = 12%rd = 4%T = 25.8%
WACC = %
4.Medium
WACC = ?equity€5 000 000re​ = 10%debt€4 000 000rd​ = 6%T = 28%

A company has equity worth €5 000 000 and debt worth €4 000 000. Its cost of equity is 10%, its pre-tax cost of debt is 6% and the tax rate is 28%. Find the WACC.

E = €5 000 000D = €4 000 000re = 10%rd = 6%T = 28%
WACC = %
5.Hard
WACC = ?equity1 000 000 × €9.50β = 0.6rf​ = 2.5%, rm​ = 9%debt40 000 × €1 050rd​ = 6%T = 25%

A company has 1 000 000 shares at €9.50 each and 40 000 bonds trading at €1 050 each. The pre-tax cost of debt is 6% and the tax rate is 25%. The share’s beta is 0.6, the risk-free rate 2.5% and the market return 9%. Find the WACC.

β = 0.6rf = 2.5%rm = 9%rd = 6%T = 25%
WACC = %
6.Hard
WACC = ?equity4 000 000 × €48.00β = 1.8rf​ = 2.5%, rm​ = 9%debt40 000 × €1 000rd​ = 5%T = 20%

A company has 4 000 000 shares at €48.00 each and 40 000 bonds trading at €1 000 each. The pre-tax cost of debt is 5% and the tax rate is 20%. The share’s beta is 1.8, the risk-free rate 2.5% and the market return 9%. Find the WACC.

β = 1.8rf = 2.5%rm = 9%rd = 5%T = 20%
WACC = %

Answer key

  1. 1. re = 9 %
  2. 2. re = 8.15 %
  3. 3. WACC = 9.419 %
  4. 4. WACC = 7.476 %
  5. 5. WACC = 4.85 %
  6. 6. WACC = 12.44 %

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