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​ = 7.5%β = ?re​ = 7%

Investors require a return of 7% on a share. The risk-free rate is 2.5% and the expected market return is 7.5%. Use CAPM to find the beta β of the share.

re = 7%rf = 2.5%rm = 7.5%
β =
2.Easy
βr (%)SMLrf​ = 4%β = 1rm​ = 11%β = 1.5re​ = ?

The risk-free rate is 4%, the expected market return is 11% and a share has a beta of 1.5. Use CAPM to find the required return on the share re.

rf = 4%rm = 11%β = 1.5
re = %
3.Medium
WACC = ?ordinary shares€6 000 000re​ = 9%preferred shares€2 000 000rp​ = 8%debt€3 000 000rd​ = 4%T = 30%

A company is financed with ordinary shares worth €6 000 000, preferred shares worth €2 000 000 and debt worth €3 000 000. The cost of equity is 9%, the cost of preferred stock 8% and the pre-tax cost of debt 4%. The tax rate is 30%. Find the WACC.

E = €6 000 000Ps = €2 000 000D = €3 000 000re = 9%rp = 8%rd = 4%T = 30%
WACC = %
4.Medium
WACC = ?ordinary shares€4 000 000re​ = 9%preferred shares€500 000rp​ = 7%debt€4 000 000rd​ = 5%T = 25.8%

A company is financed with ordinary shares worth €4 000 000, preferred shares worth €500 000 and debt worth €4 000 000. The cost of equity is 9%, the cost of preferred stock 7% and the pre-tax cost of debt 5%. The tax rate is 25.8%. Find the WACC.

E = €4 000 000Ps = €500 000D = €4 000 000re = 9%rp = 7%rd = 5%T = 25.8%
WACC = %
5.Hard
WACC = ?equity1 000 000 × €46.50β = 1.8rf​ = 3.5%, rm​ = 9.5%debt10 000 × €980rd​ = 3%T = 30%

A company has 1 000 000 shares at €46.50 each and 10 000 bonds trading at €980 each. The pre-tax cost of debt is 3% and the tax rate is 30%. The share’s beta is 1.8, the risk-free rate 3.5% and the market return 9.5%. Find the WACC.

β = 1.8rf = 3.5%rm = 9.5%rd = 3%T = 30%
WACC = %
6.Hard
rf​ = 3%, rm​ − rf​ = 6.5%no debtequityβU​ = 0.8D/E = 0.4equityre​ = ?debtT = 21%

A company's business has an unlevered (asset) beta of 0.8. It plans a debt-to-equity ratio of 0.4. The tax rate is 21%, the risk-free rate is 3% and the market risk premium is 6.5%. Find the cost of equity re at the new capital structure.

βU = 0.8D/E = 0.4T = 21%rf = 3%rm − rf = 6.5%
re = %

Answer key

  1. 1. β = 0.9
  2. 2. re = 14.5 %
  3. 3. WACC = 7.127 %
  4. 4. WACC = 6.393 %
  5. 5. WACC = 12.18 %
  6. 6. re = 9.843 %

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