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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Name: ____________________   Date: ____________

1.Easy
years0123…9Pp​ = €37€4.50€4.50€4.50…rp​ = ?

A company's preferred shares pay a fixed dividend of €4.50 per year and trade at €37. The tax rate is 30%. Find the cost of preferred stock rp.

Dp = €4.50Pp = €37T = 30%
rp = %
2.Easy
βr (%)SMLrf​ = 4%β = 1rm​ = 9%β = 1.2re​ = ?

The risk-free rate is 4%, the expected market return is 9% and a share has a beta of 1.2. Use CAPM to find the required return on the share re.

rf = 4%rm = 9%β = 1.2
re = %
3.Medium
WACC = ?equity€5 000 000re​ = 12%debt€6 000 000rd​ = 3.5%T = 25.8%

A company has equity worth €5 000 000 and debt worth €6 000 000. Its cost of equity is 12%, its pre-tax cost of debt is 3.5% and the tax rate is 25.8%. Find the WACC.

E = €5 000 000D = €6 000 000re = 12%rd = 3.5%T = 25.8%
WACC = %
4.Medium
WACC = ?equity€4 000 000re​ = 9%debt€5 000 000rd​ = 6%T = 20%

A company has equity worth €4 000 000 and debt worth €5 000 000. Its cost of equity is 9%, its pre-tax cost of debt is 6% and the tax rate is 20%. Find the WACC.

E = €4 000 000D = €5 000 000re = 9%rd = 6%T = 20%
WACC = %
5.Hard
WACC = ?equity2 000 000 × €13.00β = 1.8rf​ = 2%, rm​ = 7.5%debt5 000 × €1 020rd​ = 5%T = 25%

A company has 2 000 000 shares at €13.00 each and 5 000 bonds trading at €1 020 each. The pre-tax cost of debt is 5% and the tax rate is 25%. The share’s beta is 1.8, the risk-free rate 2% and the market return 7.5%. Find the WACC.

β = 1.8rf = 2%rm = 7.5%rd = 5%T = 25%
WACC = %
6.Hard
WACC = ?equity1 000 000 × €9.50β = 1.3rf​ = 3%, rm​ = 7%debt10 000 × €980rd​ = 4.5%T = 21%

A company has 1 000 000 shares at €9.50 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 1.3, the risk-free rate 3% and the market return 7%. Find the WACC.

β = 1.3rf = 3%rm = 7%rd = 4.5%T = 21%
WACC = %

Answer key

  1. 1. rp = 12.16 %
  2. 2. re = 10 %
  3. 3. WACC = 6.871 %
  4. 4. WACC = 6.667 %
  5. 5. WACC = 10.56 %
  6. 6. WACC = 5.841 %

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