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​ = 8%β = 1.2re​ = ?

The risk-free rate is 1%, the expected market return is 8% and a share has a beta of 1.2. Use CAPM to find the required return on the share re.

rf = 1%rm = 8%β = 1.2
re = %
2.Easy
Dloans€8 000 000I = €560 000tax savingT = 25%interest after tax?rd​·(1 − T) = ?

A company has loans of €8 000 000 on which it pays €560 000 interest per year. The tax rate is 25%. Find the after-tax cost of debt rd·(1 − T) in percent.

D = €8 000 000I = €560 000T = 25%
rd·(1 − T) = %
3.Medium
WACC = ?ordinary shares€5 000 000re​ = 12%preferred shares€500 000rp​ = 6%debt€3 000 000rd​ = 4.5%T = 28%

A company is financed with ordinary shares worth €5 000 000, preferred shares worth €500 000 and debt worth €3 000 000. The cost of equity is 12%, the cost of preferred stock 6% and the pre-tax cost of debt 4.5%. The tax rate is 28%. Find the WACC.

E = €5 000 000Ps = €500 000D = €3 000 000re = 12%rp = 6%rd = 4.5%T = 28%
WACC = %
4.Medium
WACC = ?equity€4 000 000re​ = 12%debt€5 000 000rd​ = 3%T = 25.8%

A company has equity worth €4 000 000 and debt worth €5 000 000. Its cost of equity is 12%, its pre-tax cost of debt is 3% and the tax rate is 25.8%. Find the WACC.

E = €4 000 000D = €5 000 000re = 12%rd = 3%T = 25.8%
WACC = %
5.Hard
WACC = ?equity2 500 000 × €45.50β = 1.1rf​ = 1.5%, rm​ = 8.5%debt10 000 × €960rd​ = 4.5%T = 25.8%

A company has 2 500 000 shares at €45.50 each and 10 000 bonds trading at €960 each. The pre-tax cost of debt is 4.5% and the tax rate is 25.8%. The share’s beta is 1.1, the risk-free rate 1.5% and the market return 8.5%. Find the WACC.

β = 1.1rf = 1.5%rm = 8.5%rd = 4.5%T = 25.8%
WACC = %
6.Hard
WACC = ?equity5 000 000 × €32.00β = 0.6rf​ = 3%, rm​ = 9%debt10 000 × €1 000rd​ = 3%T = 28%

A company has 5 000 000 shares at €32.00 each and 10 000 bonds trading at €1 000 each. The pre-tax cost of debt is 3% and the tax rate is 28%. The share’s beta is 0.6, the risk-free rate 3% and the market return 9%. Find the WACC.

β = 0.6rf = 3%rm = 9%rd = 3%T = 28%
WACC = %

Answer key

  1. 1. re = 9.4 %
  2. 2. rd·(1 − T) = 5.25 %
  3. 3. WACC = 8.555 %
  4. 4. WACC = 6.57 %
  5. 5. WACC = 8.744 %
  6. 6. WACC = 6.339 %

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