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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Name: ____________________   Date: ____________

1.Easy
years0123…9Pp​ = €98€5.50€5.50€5.50…rp​ = ?

A company's preferred shares pay a fixed dividend of €5.50 per year and trade at €98. The tax rate is 30%. Find the cost of preferred stock rp.

Dp = €5.50Pp = €98T = 30%
rp = %
2.Easy
Dloans€5 000 000I = €175 000tax savingT = 20%interest after tax?rd​·(1 − T) = ?

A company has loans of €5 000 000 on which it pays €175 000 interest per year. The tax rate is 20%. Find the after-tax cost of debt rd·(1 − T) in percent.

D = €5 000 000I = €175 000T = 20%
rd·(1 − T) = %
3.Medium
WACC = ?equity€4 000 000re​ = 10%debt€3 000 000rd​ = 6%T = 30%

A company has equity worth €4 000 000 and debt worth €3 000 000. Its cost of equity is 10%, its pre-tax cost of debt is 6% and the tax rate is 30%. Find the WACC.

E = €4 000 000D = €3 000 000re = 10%rd = 6%T = 30%
WACC = %
4.Medium
βr (%)SMLrf​ = 1.5%β = 1rm​ = ?β = 2re​ = 11.5%

A share with a beta of 2 has a required return of 11.5%. The risk-free rate is 1.5%. What expected market return rm does CAPM imply?

β = 2re = 11.5%rf = 1.5%
rm = %
5.Hard
WACC = ?equity4 000 000 × €59.50β = 1.8rf​ = 3.5%, rm​ = 10%debt5 000 × €960rd​ = 3%T = 20%

A company has 4 000 000 shares at €59.50 each and 5 000 bonds trading at €960 each. The pre-tax cost of debt is 3% and the tax rate is 20%. The share’s beta is 1.8, the risk-free rate 3.5% and the market return 10%. Find the WACC.

β = 1.8rf = 3.5%rm = 10%rd = 3%T = 20%
WACC = %
6.Hard
WACC = ?equity5 000 000 × €47.00β = 1.8rf​ = 2.5%, rm​ = 9.5%debt5 000 × €1 020rd​ = 7%T = 28%

A company has 5 000 000 shares at €47.00 each and 5 000 bonds trading at €1 020 each. The pre-tax cost of debt is 7% and the tax rate is 28%. The share’s beta is 1.8, the risk-free rate 2.5% and the market return 9.5%. Find the WACC.

β = 1.8rf = 2.5%rm = 9.5%rd = 7%T = 28%
WACC = %

Answer key

  1. 1. rp = 5.612 %
  2. 2. rd·(1 − T) = 2.8 %
  3. 3. WACC = 7.514 %
  4. 4. rm = 6.5 %
  5. 5. WACC = 14.95 %
  6. 6. WACC = 14.89 %

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