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
years0123…9Pp​ = €86€6.00€6.00€6.00…rp​ = ?

A company's preferred shares pay a fixed dividend of €6.00 per year and trade at €86. The tax rate is 30%. Find the cost of preferred stock rp.

Dp = €6.00Pp = €86T = 30%
rp = %
2.Easy
βr (%)SMLrf​ = 3%β = 1rm​ = 7%β = 1.5re​ = ?

The risk-free rate is 3%, the expected market return is 7% and a share has a beta of 1.5. Use CAPM to find the required return on the share re.

rf = 3%rm = 7%β = 1.5
re = %
3.Medium
WACC = 8.86%equity€5 000 000re​ = ?debt€5 000 000rd​ = 5%T = 25.8%

A company has equity worth €5 000 000 and debt worth €5 000 000. Its WACC is 8.86%, its pre-tax cost of debt is 5% and the tax rate is 25.8%. Find the cost of equity re.

E = €5 000 000D = €5 000 000WACC = 8.86%rd = 5%T = 25.8%
re = %
4.Medium
WACC = ?equity€8 000 000re​ = 11%debt€4 000 000rd​ = 3.5%T = 20%

A company has equity worth €8 000 000 and debt worth €4 000 000. Its cost of equity is 11%, its pre-tax cost of debt is 3.5% and the tax rate is 20%. Find the WACC.

E = €8 000 000D = €4 000 000re = 11%rd = 3.5%T = 20%
WACC = %
5.Hard
WACC = ?equity5 000 000 × €48.00D0​ = €2.70g = 3%debt€144 000 000rd​ = 3%T = 30%

A company has 5 000 000 shares trading at €48.00; the book value of its equity is €72 000 000. It just paid a dividend of €2.70 per share, and dividends grow by 3% per year. Its debt has a market value of €144 000 000 and a pre-tax cost of 3%. The tax rate is 30%. Find the WACC, using the dividend growth model for the cost of equity.

N = 5 000 000P0 = €48.00book equity = €72 000 000D0 = €2.70g = 3%D = €144 000 000rd = 3%T = 30%
WACC = %
6.Hard
WACC = ?equity1 000 000 × €20.50β = 1.5rf​ = 1%, rm​ = 6%debt5 000 × €1 050rd​ = 4.5%T = 25.8%

A company has 1 000 000 shares at €20.50 each and 5 000 bonds trading at €1 050 each. The pre-tax cost of debt is 4.5% and the tax rate is 25.8%. The share’s beta is 1.5, the risk-free rate 1% and the market return 6%. Find the WACC.

β = 1.5rf = 1%rm = 6%rd = 4.5%T = 25.8%
WACC = %

Answer key

  1. 1. rp = 6.977 %
  2. 2. re = 9 %
  3. 3. re = 14.01 %
  4. 4. WACC = 8.267 %
  5. 5. WACC = 6.284 %
  6. 6. WACC = 7.448 %

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