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​ = 7.5%β = 1.8re​ = ?

The risk-free rate is 1.5%, the expected market return is 7.5% and a share has a beta of 1.8. Use CAPM to find the required return on the share re.

rf = 1.5%rm = 7.5%β = 1.8
re = %
2.Easy
βr (%)SMLrf​ = 3.5%β = 1rm​ = 8%β = 1.5re​ = ?

The risk-free rate is 3.5%, the expected market return is 8% and a share has a beta of 1.5. Use CAPM to find the required return on the share re.

rf = 3.5%rm = 8%β = 1.5
re = %
3.Medium
WACC = ?equity€6 000 000re​ = 14%debt€4 000 000rd​ = 5%T = 20%

A company has equity worth €6 000 000 and debt worth €4 000 000. Its cost of equity is 14%, its pre-tax cost of debt is 5% and the tax rate is 20%. Find the WACC.

E = €6 000 000D = €4 000 000re = 14%rd = 5%T = 20%
WACC = %
4.Medium
WACC = ?equity€4 000 000re​ = 8%debt€6 000 000rd​ = 5%T = 25.8%

A company has equity worth €4 000 000 and debt worth €6 000 000. Its cost of equity is 8%, its pre-tax cost of debt is 5% and the tax rate is 25.8%. Find the WACC.

E = €4 000 000D = €6 000 000re = 8%rd = 5%T = 25.8%
WACC = %
5.Hard
rf​ = 2.5%, rm​ − rf​ = 5%no debtequityβU​ = 1.2D/E = 1equityre​ = ?debtT = 25%

A company's business has an unlevered (asset) beta of 1.2. It plans a debt-to-equity ratio of 1. The tax rate is 25%, the risk-free rate is 2.5% and the market risk premium is 5%. Find the cost of equity re at the new capital structure.

βU = 1.2D/E = 1T = 25%rf = 2.5%rm − rf = 5%
re = %
6.Hard
WACC = ?equity1 000 000 × €51.00D0​ = €1.60g = 3%debt€40 800 000rd​ = 4%T = 28%

A company has 1 000 000 shares trading at €51.00; the book value of its equity is €15 300 000. It just paid a dividend of €1.60 per share, and dividends grow by 3% per year. Its debt has a market value of €40 800 000 and a pre-tax cost of 4%. The tax rate is 28%. Find the WACC, using the dividend growth model for the cost of equity.

N = 1 000 000P0 = €51.00book equity = €15 300 000D0 = €1.60g = 3%D = €40 800 000rd = 4%T = 28%
WACC = %

Answer key

  1. 1. re = 12.3 %
  2. 2. re = 10.25 %
  3. 3. WACC = 10 %
  4. 4. WACC = 5.426 %
  5. 5. re = 13 %
  6. 6. WACC = 4.742 %

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