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​ = 8.5%β = 0.9re​ = ?

The risk-free rate is 2.5%, the expected market return is 8.5% and a share has a beta of 0.9. Use CAPM to find the required return on the share re.

rf = 2.5%rm = 8.5%β = 0.9
re = %
2.Easy
βr (%)SMLrf​ = 1%β = 1rm​ = 7%β = 1.1re​ = ?

The risk-free rate is 1%, the expected market return is 7% and a share has a beta of 1.1. Use CAPM to find the required return on the share re.

rf = 1%rm = 7%β = 1.1
re = %
3.Medium
WACC = ?equityEre​ = 9%debtD = 0.6·Erd​ = 6%T = 20%

A company has a debt-to-equity ratio (at market values) of 0.6. Its cost of equity is 9%, its pre-tax cost of debt is 6% and the tax rate is 20%. Find the WACC.

D/E = 0.6re = 9%rd = 6%T = 20%
WACC = %
4.Medium
WACC = ?ordinary shares€10 000 000re​ = 13%preferred shares€500 000rp​ = 7%debt€6 000 000rd​ = 4.5%T = 28%

A company is financed with ordinary shares worth €10 000 000, preferred shares worth €500 000 and debt worth €6 000 000. The cost of equity is 13%, the cost of preferred stock 7% and the pre-tax cost of debt 4.5%. The tax rate is 28%. Find the WACC.

E = €10 000 000Ps = €500 000D = €6 000 000re = 13%rp = 7%rd = 4.5%T = 28%
WACC = %
5.Hard
WACC = ?equity5 000 000 × €29.00β = 1.5rf​ = 3%, rm​ = 7.5%debt10 000 × €960rd​ = 6%T = 25.8%

A company has 5 000 000 shares at €29.00 each and 10 000 bonds trading at €960 each. The pre-tax cost of debt is 6% and the tax rate is 25.8%. The share’s beta is 1.5, the risk-free rate 3% and the market return 7.5%. Find the WACC.

β = 1.5rf = 3%rm = 7.5%rd = 6%T = 25.8%
WACC = %
6.Hard
WACC = ?equity€6 000 000re​ = 10%bonds2 000 × €1 143coupon 4%, n = 11T = 30%

A company has equity with a market value of €6 000 000 and a cost of equity of 10%. Its debt consists of 2 000 bonds (face value €1 000, annual coupon 4%, 11 years to maturity) that trade at €1 143 each. The tax rate is 30%. Find the WACC, using the yield to maturity of the bonds as the pre-tax cost of debt.

E = €6 000 000re = 10%bonds: 2 000 × €1 143coupon = 4%n = 11T = 30%
WACC = %

Answer key

  1. 1. re = 7.9 %
  2. 2. re = 7.6 %
  3. 3. WACC = 7.425 %
  4. 4. WACC = 9.269 %
  5. 5. WACC = 9.421 %
  6. 6. WACC = 7.723 %

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