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 = 1.3re​ = ?

The risk-free rate is 1.5%, 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 = 1.5%rm = 6.5%β = 1.3
re = %
2.Easy
βr (%)SMLrf​ = 1.5%β = 1rm​ = 8%β = 1.2re​ = ?

The risk-free rate is 1.5%, 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 = 1.5%rm = 8%β = 1.2
re = %
3.Medium
WACC = ?equityEre​ = 8%debtD = 1.5·Erd​ = 4.5%T = 20%

A company has a debt-to-equity ratio (at market values) of 1.5. Its cost of equity is 8%, its pre-tax cost of debt is 4.5% and the tax rate is 20%. Find the WACC.

D/E = 1.5re = 8%rd = 4.5%T = 20%
WACC = %
4.Medium
WACC = ?ordinary shares€12 000 000re​ = 13%preferred shares€500 000rp​ = 8%debt€2 000 000rd​ = 4.5%T = 25%

A company is financed with ordinary shares worth €12 000 000, preferred shares worth €500 000 and debt worth €2 000 000. The cost of equity is 13%, the cost of preferred stock 8% and the pre-tax cost of debt 4.5%. The tax rate is 25%. Find the WACC.

E = €12 000 000Ps = €500 000D = €2 000 000re = 13%rp = 8%rd = 4.5%T = 25%
WACC = %
5.Hard
WACC = ?equity5 000 000 × €11.00D0​ = €0.90g = 5%debt€33 000 000rd​ = 3%T = 25.8%

A company has 5 000 000 shares trading at €11.00; the book value of its equity is €16 500 000. It just paid a dividend of €0.90 per share, and dividends grow by 5% per year. Its debt has a market value of €33 000 000 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 = 5 000 000P0 = €11.00book equity = €16 500 000D0 = €0.90g = 5%D = €33 000 000rd = 3%T = 25.8%
WACC = %
6.Hard
WACC = ?equity2 500 000 × €9.50β = 0.8rf​ = 2.5%, rm​ = 9.5%debt40 000 × €1 050rd​ = 3.5%T = 25.8%

A company has 2 500 000 shares at €9.50 each and 40 000 bonds trading at €1 050 each. The pre-tax cost of debt is 3.5% and the tax rate is 25.8%. The share’s beta is 0.8, the risk-free rate 2.5% and the market return 9.5%. Find the WACC.

β = 0.8rf = 2.5%rm = 9.5%rd = 3.5%T = 25.8%
WACC = %

Answer key

  1. 1. re = 8 %
  2. 2. re = 9.3 %
  3. 3. WACC = 5.36 %
  4. 4. WACC = 11.5 %
  5. 5. WACC = 9.329 %
  6. 6. WACC = 4.585 %

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