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​ = 5.5%β = ?re​ = 10%

Investors require a return of 10% on a share. The risk-free rate is 1% and the expected market return is 5.5%. Use CAPM to find the beta β of the share.

re = 10%rf = 1%rm = 5.5%
β =
2.Easy
βr (%)SMLrf​ = 3.5%β = 1rm​ = 10%β = 1.1re​ = ?

The risk-free rate is 3.5%, the expected market return is 10% and a share has a beta of 1.1. Use CAPM to find the required return on the share re.

rf = 3.5%rm = 10%β = 1.1
re = %
3.Medium
WACC = ?equityEre​ = 11%debtD = 1·Erd​ = 4%T = 25.8%

A company has a debt-to-equity ratio (at market values) of 1. Its cost of equity is 11%, its pre-tax cost of debt is 4% and the tax rate is 25.8%. Find the WACC.

D/E = 1re = 11%rd = 4%T = 25.8%
WACC = %
4.Medium
WACC = ?equity€2 000 000re​ = 9%debt€4 000 000rd​ = 6%T = 30%

A company has equity worth €2 000 000 and debt worth €4 000 000. Its cost of equity is 9%, its pre-tax cost of debt is 6% and the tax rate is 30%. Find the WACC.

E = €2 000 000D = €4 000 000re = 9%rd = 6%T = 30%
WACC = %
5.Hard
WACC = ?equity€15 000 000re​ = 9%bonds2 000 × €1 108coupon 4%, n = 8T = 25.8%

A company has equity with a market value of €15 000 000 and a cost of equity of 9%. Its debt consists of 2 000 bonds (face value €1 000, annual coupon 4%, 8 years to maturity) that trade at €1 108 each. The tax rate is 25.8%. Find the WACC, using the yield to maturity of the bonds as the pre-tax cost of debt.

E = €15 000 000re = 9%bonds: 2 000 × €1 108coupon = 4%n = 8T = 25.8%
WACC = %
6.Hard
WACC = ?equity4 000 000 × €22.00β = 1.2rf​ = 4%, rm​ = 9.5%debt5 000 × €980rd​ = 4%T = 21%

A company has 4 000 000 shares at €22.00 each and 5 000 bonds trading at €980 each. The pre-tax cost of debt is 4% and the tax rate is 21%. The share’s beta is 1.2, the risk-free rate 4% and the market return 9.5%. Find the WACC.

β = 1.2rf = 4%rm = 9.5%rd = 4%T = 21%
WACC = %

Answer key

  1. 1. β = 2
  2. 2. re = 10.65 %
  3. 3. WACC = 6.984 %
  4. 4. WACC = 5.8 %
  5. 5. WACC = 8.08 %
  6. 6. WACC = 10.21 %

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