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%β = 1rm​ = 9%β = ?re​ = 8.3%

Investors require a return of 8.3% on a share. The risk-free rate is 2% and the expected market return is 9%. Use CAPM to find the beta β of the share.

re = 8.3%rf = 2%rm = 9%
β =
2.Easy
βr (%)SMLrf​ = 3.5%β = 1rm​ = 10%β = 0.8re​ = ?

The risk-free rate is 3.5%, the expected market return is 10% and a share has a beta of 0.8. Use CAPM to find the required return on the share re.

rf = 3.5%rm = 10%β = 0.8
re = %
3.Medium
WACC = 7.83%equity€10 000 000re​ = ?debt€5 000 000rd​ = 5%T = 30%

A company has equity worth €10 000 000 and debt worth €5 000 000. Its WACC is 7.83%, its pre-tax cost of debt is 5% and the tax rate is 30%. Find the cost of equity re.

E = €10 000 000D = €5 000 000WACC = 7.83%rd = 5%T = 30%
re = %
4.Medium
WACC = ?equity€8 000 000re​ = 13%debt€1 000 000rd​ = 3.5%T = 21%

A company has equity worth €8 000 000 and debt worth €1 000 000. Its cost of equity is 13%, its pre-tax cost of debt is 3.5% and the tax rate is 21%. Find the WACC.

E = €8 000 000D = €1 000 000re = 13%rd = 3.5%T = 21%
WACC = %
5.Hard
WACC = ?equity2 500 000 × €57.50β = 0.9rf​ = 1.5%, rm​ = 5.5%debt10 000 × €980rd​ = 3%T = 25.8%

A company has 2 500 000 shares at €57.50 each and 10 000 bonds trading at €980 each. The pre-tax cost of debt is 3% and the tax rate is 25.8%. The share’s beta is 0.9, the risk-free rate 1.5% and the market return 5.5%. Find the WACC.

β = 0.9rf = 1.5%rm = 5.5%rd = 3%T = 25.8%
WACC = %
6.Hard
rf​ = 3.5%, rm​ − rf​ = 6%no debtequityβU​ = 0.9D/E = 0.5equityre​ = ?debtT = 28%

A company's business has an unlevered (asset) beta of 0.9. It plans a debt-to-equity ratio of 0.5. The tax rate is 28%, the risk-free rate is 3.5% and the market risk premium is 6%. Find the cost of equity re at the new capital structure.

βU = 0.9D/E = 0.5T = 28%rf = 3.5%rm − rf = 6%
re = %

Answer key

  1. 1. β = 0.9
  2. 2. re = 8.7 %
  3. 3. re = 9.995 %
  4. 4. WACC = 11.86 %
  5. 5. WACC = 4.917 %
  6. 6. re = 10.84 %

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