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​ = 4%β = 1rm​ = 9.5%β = 0.9re​ = ?

The risk-free rate is 4%, the expected market return is 9.5% and a share has a beta of 0.9. Use CAPM to find the required return on the share re.

rf = 4%rm = 9.5%β = 0.9
re = %
2.Easy
βr (%)SMLrf​ = 2.5%β = 1rm​ = 6.5%β = 1.5re​ = ?

The risk-free rate is 2.5%, the expected market return is 6.5% and a share has a beta of 1.5. Use CAPM to find the required return on the share re.

rf = 2.5%rm = 6.5%β = 1.5
re = %
3.Medium
WACC = ?equity€4 000 000re​ = 9%debt€6 000 000rd​ = 7%T = 21%

A company has equity worth €4 000 000 and debt worth €6 000 000. Its cost of equity is 9%, its pre-tax cost of debt is 7% and the tax rate is 21%. Find the WACC.

E = €4 000 000D = €6 000 000re = 9%rd = 7%T = 21%
WACC = %
4.Medium
WACC = ?equityEre​ = 10%debtD = 0.4·Erd​ = 4.5%T = 20%

A company has a debt-to-equity ratio (at market values) of 0.4. Its cost of equity is 10%, its pre-tax cost of debt is 4.5% and the tax rate is 20%. Find the WACC.

D/E = 0.4re = 10%rd = 4.5%T = 20%
WACC = %
5.Hard
WACC = ?equity4 000 000 × €52.50D0​ = €2.90g = 5%debt€105 000 000rd​ = 5%T = 21%

A company has 4 000 000 shares trading at €52.50; the book value of its equity is €84 000 000. It just paid a dividend of €2.90 per share, and dividends grow by 5% per year. Its debt has a market value of €105 000 000 and a pre-tax cost of 5%. The tax rate is 21%. Find the WACC, using the dividend growth model for the cost of equity.

N = 4 000 000P0 = €52.50book equity = €84 000 000D0 = €2.90g = 5%D = €105 000 000rd = 5%T = 21%
WACC = %
6.Hard
WACC = ?equity1 000 000 × €42.50β = 1.8rf​ = 1%, rm​ = 5%debt10 000 × €980rd​ = 4.5%T = 21%

A company has 1 000 000 shares at €42.50 each and 10 000 bonds trading at €980 each. The pre-tax cost of debt is 4.5% and the tax rate is 21%. The share’s beta is 1.8, the risk-free rate 1% and the market return 5%. Find the WACC.

β = 1.8rf = 1%rm = 5%rd = 4.5%T = 21%
WACC = %

Answer key

  1. 1. re = 8.95 %
  2. 2. re = 8.5 %
  3. 3. WACC = 6.918 %
  4. 4. WACC = 8.171 %
  5. 5. WACC = 8.517 %
  6. 6. WACC = 7.33 %

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