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​ = 3%β = 1rm​ = 8.5%β = 1.1re​ = ?

The risk-free rate is 3%, the expected market return is 8.5% and a share has a beta of 1.1. Use CAPM to find the required return on the share re.

rf = 3%rm = 8.5%β = 1.1
re = %
2.Easy
βr (%)SMLrf​ = 1%β = 1rm​ = 7.5%β = 1.8re​ = ?

The risk-free rate is 1%, 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%rm = 7.5%β = 1.8
re = %
3.Medium
WACC = 9.86%equity€10 000 000re​ = ?debt€4 000 000rd​ = 6%T = 25%

A company has equity worth €10 000 000 and debt worth €4 000 000. Its WACC is 9.86%, its pre-tax cost of debt is 6% and the tax rate is 25%. Find the cost of equity re.

E = €10 000 000D = €4 000 000WACC = 9.86%rd = 6%T = 25%
re = %
4.Medium
WACC = 9.08%equity€6 000 000re​ = ?debt€3 000 000rd​ = 4.5%T = 28%

A company has equity worth €6 000 000 and debt worth €3 000 000. Its WACC is 9.08%, its pre-tax cost of debt is 4.5% and the tax rate is 28%. Find the cost of equity re.

E = €6 000 000D = €3 000 000WACC = 9.08%rd = 4.5%T = 28%
re = %
5.Hard
WACC = ?equity2 500 000 × €10.00β = 0.8rf​ = 2.5%, rm​ = 6.5%debt20 000 × €1 020rd​ = 7%T = 30%

A company has 2 500 000 shares at €10.00 each and 20 000 bonds trading at €1 020 each. The pre-tax cost of debt is 7% and the tax rate is 30%. The share’s beta is 0.8, the risk-free rate 2.5% and the market return 6.5%. Find the WACC.

β = 0.8rf = 2.5%rm = 6.5%rd = 7%T = 30%
WACC = %
6.Hard
WACC = ?equity€6 000 000re​ = 12%bonds4 000 × €967coupon 6%, n = 9T = 25.8%

A company has equity with a market value of €6 000 000 and a cost of equity of 12%. Its debt consists of 4 000 bonds (face value €1 000, annual coupon 6%, 9 years to maturity) that trade at €967 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 = €6 000 000re = 12%bonds: 4 000 × €967coupon = 6%n = 9T = 25.8%
WACC = %

Answer key

  1. 1. re = 9.05 %
  2. 2. re = 12.7 %
  3. 3. re = 12 %
  4. 4. re = 12 %
  5. 5. WACC = 5.341 %
  6. 6. WACC = 9.186 %

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