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​ = €76€7.50€7.50€7.50…rp​ = ?

A company's preferred shares pay a fixed dividend of €7.50 per year and trade at €76. The tax rate is 21%. Find the cost of preferred stock rp.

Dp = €7.50Pp = €76T = 21%
rp = %
2.Easy
βr (%)SMLrf​ = 2.5%β = 1rm​ = 9.5%β = 0.9re​ = ?

The risk-free rate is 2.5%, 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 = 2.5%rm = 9.5%β = 0.9
re = %
3.Medium
WACC = 9.54%equity€4 000 000re​ = ?debt€3 000 000rd​ = 4.5%T = 20%

A company has equity worth €4 000 000 and debt worth €3 000 000. Its WACC is 9.54%, its pre-tax cost of debt is 4.5% and the tax rate is 20%. Find the cost of equity re.

E = €4 000 000D = €3 000 000WACC = 9.54%rd = 4.5%T = 20%
re = %
4.Medium
WACC = ?equity€12 000 000re​ = 14%debt€1 000 000rd​ = 3.5%T = 30%

A company has equity worth €12 000 000 and debt worth €1 000 000. Its cost of equity is 14%, its pre-tax cost of debt is 3.5% and the tax rate is 30%. Find the WACC.

E = €12 000 000D = €1 000 000re = 14%rd = 3.5%T = 30%
WACC = %
5.Hard
WACC = ?equity2 000 000 × €24.50β = 0.6rf​ = 1.5%, rm​ = 5.5%debt5 000 × €960rd​ = 6%T = 28%

A company has 2 000 000 shares at €24.50 each and 5 000 bonds trading at €960 each. The pre-tax cost of debt is 6% and the tax rate is 28%. The share’s beta is 0.6, the risk-free rate 1.5% and the market return 5.5%. Find the WACC.

β = 0.6rf = 1.5%rm = 5.5%rd = 6%T = 28%
WACC = %
6.Hard
WACC = ?equity1 000 000 × €53.50β = 0.8rf​ = 1%, rm​ = 5%debt20 000 × €980rd​ = 3.5%T = 21%

A company has 1 000 000 shares at €53.50 each and 20 000 bonds trading at €980 each. The pre-tax cost of debt is 3.5% and the tax rate is 21%. The share’s beta is 0.8, the risk-free rate 1% and the market return 5%. Find the WACC.

β = 0.8rf = 1%rm = 5%rd = 3.5%T = 21%
WACC = %

Answer key

  1. 1. rp = 9.868 %
  2. 2. re = 8.8 %
  3. 3. re = 13.99 %
  4. 4. WACC = 13.11 %
  5. 5. WACC = 3.937 %
  6. 6. WACC = 3.815 %

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