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​ = 9%β = 1.5re​ = ?

The risk-free rate is 3%, the expected market return is 9% and a share has a beta of 1.5. Use CAPM to find the required return on the share re.

rf = 3%rm = 9%β = 1.5
re = %
2.Easy
βr (%)SMLrf​ = 2.5%β = 1rm​ = 8%β = 0.6re​ = ?

The risk-free rate is 2.5%, the expected market return is 8% and a share has a beta of 0.6. Use CAPM to find the required return on the share re.

rf = 2.5%rm = 8%β = 0.6
re = %
3.Medium
βr (%)SMLrf​ = 2.5%β = 1rm​ = ?β = 0.6re​ = 5.5%

A share with a beta of 0.6 has a required return of 5.5%. The risk-free rate is 2.5%. What expected market return rm does CAPM imply?

β = 0.6re = 5.5%rf = 2.5%
rm = %
4.Medium
WACC = ?equity€8 000 000re​ = 8%debt€5 000 000rd​ = 6%T = 30%

A company has equity worth €8 000 000 and debt worth €5 000 000. Its cost of equity is 8%, its pre-tax cost of debt is 6% and the tax rate is 30%. Find the WACC.

E = €8 000 000D = €5 000 000re = 8%rd = 6%T = 30%
WACC = %
5.Hard
WACC = ?equity1 000 000 × €35.50β = 0.8rf​ = 1.5%, rm​ = 6.5%debt10 000 × €1 020rd​ = 3%T = 28%

A company has 1 000 000 shares at €35.50 each and 10 000 bonds trading at €1 020 each. The pre-tax cost of debt is 3% and the tax rate is 28%. The share’s beta is 0.8, the risk-free rate 1.5% and the market return 6.5%. Find the WACC.

β = 0.8rf = 1.5%rm = 6.5%rd = 3%T = 28%
WACC = %
6.Hard
WACC = ?equity4 000 000 × €35.00β = 1.5rf​ = 2.5%, rm​ = 8%debt5 000 × €1 000rd​ = 7%T = 25%

A company has 4 000 000 shares at €35.00 each and 5 000 bonds trading at €1 000 each. The pre-tax cost of debt is 7% and the tax rate is 25%. The share’s beta is 1.5, the risk-free rate 2.5% and the market return 8%. Find the WACC.

β = 1.5rf = 2.5%rm = 8%rd = 7%T = 25%
WACC = %

Answer key

  1. 1. re = 12 %
  2. 2. re = 5.8 %
  3. 3. rm = 7.5 %
  4. 4. WACC = 6.538 %
  5. 5. WACC = 4.755 %
  6. 6. WACC = 10.56 %

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