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 = 1.2re​ = ?

The risk-free rate is 2%, 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 = 2%rm = 9%β = 1.2
re = %
2.Easy
βr (%)SMLrf​ = 3.5%β = 1rm​ = 10.5%β = 1.8re​ = ?

The risk-free rate is 3.5%, the expected market return is 10.5% and a share has a beta of 1.8. Use CAPM to find the required return on the share re.

rf = 3.5%rm = 10.5%β = 1.8
re = %
3.Medium
WACC = ?equity€3 000 000re​ = 10%debt€2 000 000rd​ = 7%T = 25.8%

A company has equity worth €3 000 000 and debt worth €2 000 000. Its cost of equity is 10%, its pre-tax cost of debt is 7% and the tax rate is 25.8%. Find the WACC.

E = €3 000 000D = €2 000 000re = 10%rd = 7%T = 25.8%
WACC = %
4.Medium
WACC = ?ordinary shares€10 000 000re​ = 12%preferred shares€2 000 000rp​ = 6%debt€2 000 000rd​ = 3%T = 28%

A company is financed with ordinary shares worth €10 000 000, preferred shares worth €2 000 000 and debt worth €2 000 000. The cost of equity is 12%, the cost of preferred stock 6% and the pre-tax cost of debt 3%. The tax rate is 28%. Find the WACC.

E = €10 000 000Ps = €2 000 000D = €2 000 000re = 12%rp = 6%rd = 3%T = 28%
WACC = %
5.Hard
WACC = ?equity€10 000 000re​ = 12%bonds5 000 × €935coupon 4%, n = 8T = 25.8%

A company has equity with a market value of €10 000 000 and a cost of equity of 12%. Its debt consists of 5 000 bonds (face value €1 000, annual coupon 4%, 8 years to maturity) that trade at €935 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 = €10 000 000re = 12%bonds: 5 000 × €935coupon = 4%n = 8T = 25.8%
WACC = %
6.Hard
WACC = ?equity5 000 000 × €59.50D0​ = €1.40g = 4%debt€89 300 000rd​ = 3%T = 30%

A company has 5 000 000 shares trading at €59.50; the book value of its equity is €119 000 000. It just paid a dividend of €1.40 per share, and dividends grow by 4% per year. Its debt has a market value of €89 300 000 and a pre-tax cost of 3%. The tax rate is 30%. Find the WACC, using the dividend growth model for the cost of equity.

N = 5 000 000P0 = €59.50book equity = €119 000 000D0 = €1.40g = 4%D = €89 300 000rd = 3%T = 30%
WACC = %

Answer key

  1. 1. re = 10.4 %
  2. 2. re = 16.1 %
  3. 3. WACC = 8.078 %
  4. 4. WACC = 9.737 %
  5. 5. WACC = 9.36 %
  6. 6. WACC = 5.443 %

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