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​ = 2.5%β = 1rm​ = 8%β = 0.9re​ = ?

The risk-free rate is 2.5%, the expected market return is 8% and a share has a beta of 0.9. Use CAPM to find the required return on the share re.

rf = 2.5%rm = 8%β = 0.9
re = %
2.Easy
βr (%)SMLrf​ = 3%β = 1rm​ = 8.5%β = 1.8re​ = ?

The risk-free rate is 3%, the expected market return is 8.5% and a share has a beta of 1.8. Use CAPM to find the required return on the share re.

rf = 3%rm = 8.5%β = 1.8
re = %
3.Medium
WACC = ?equity€12 000 000re​ = 10%debt€1 000 000rd​ = 6%T = 20%

A company has equity worth €12 000 000 and debt worth €1 000 000. Its cost of equity is 10%, its pre-tax cost of debt is 6% and the tax rate is 20%. Find the WACC.

E = €12 000 000D = €1 000 000re = 10%rd = 6%T = 20%
WACC = %
4.Medium
WACC = ?ordinary shares€5 000 000re​ = 9%preferred shares€2 000 000rp​ = 6.5%debt€2 000 000rd​ = 3%T = 20%

A company is financed with ordinary shares worth €5 000 000, preferred shares worth €2 000 000 and debt worth €2 000 000. The cost of equity is 9%, the cost of preferred stock 6.5% and the pre-tax cost of debt 3%. The tax rate is 20%. Find the WACC.

E = €5 000 000Ps = €2 000 000D = €2 000 000re = 9%rp = 6.5%rd = 3%T = 20%
WACC = %
5.Hard
WACC = ?equity4 000 000 × €29.00D0​ = €3.00g = 4%debt€92 800 000rd​ = 3%T = 25.8%

A company has 4 000 000 shares trading at €29.00; the book value of its equity is €69 600 000. It just paid a dividend of €3.00 per share, and dividends grow by 4% per year. Its debt has a market value of €92 800 000 and a pre-tax cost of 3%. The tax rate is 25.8%. Find the WACC, using the dividend growth model for the cost of equity.

N = 4 000 000P0 = €29.00book equity = €69 600 000D0 = €3.00g = 4%D = €92 800 000rd = 3%T = 25.8%
WACC = %
6.Hard
WACC = ?equity2 500 000 × €52.00β = 0.8rf​ = 2%, rm​ = 9%debt10 000 × €1 020rd​ = 7%T = 30%

A company has 2 500 000 shares at €52.00 each and 10 000 bonds trading at €1 020 each. The pre-tax cost of debt is 7% and the tax rate is 30%. The share’s beta is 0.8, the risk-free rate 2% and the market return 9%. Find the WACC.

β = 0.8rf = 2%rm = 9%rd = 7%T = 30%
WACC = %

Answer key

  1. 1. re = 7.45 %
  2. 2. re = 12.9 %
  3. 3. WACC = 9.6 %
  4. 4. WACC = 6.978 %
  5. 5. WACC = 9.189 %
  6. 6. WACC = 7.404 %

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