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​ = 10%β = ?re​ = 7.2%

Investors require a return of 7.2% on a share. The risk-free rate is 3% and the expected market return is 10%. Use CAPM to find the beta β of the share.

re = 7.2%rf = 3%rm = 10%
β =
2.Easy
Dloans€12 000 000I = €660 000tax savingT = 28%interest after tax?rd​·(1 − T) = ?

A company has loans of €12 000 000 on which it pays €660 000 interest per year. The tax rate is 28%. Find the after-tax cost of debt rd·(1 − T) in percent.

D = €12 000 000I = €660 000T = 28%
rd·(1 − T) = %
3.Medium
WACC = 12.41%equity€10 000 000re​ = ?debt€2 000 000rd​ = 6%T = 25.8%

A company has equity worth €10 000 000 and debt worth €2 000 000. Its WACC is 12.41%, its pre-tax cost of debt is 6% and the tax rate is 25.8%. Find the cost of equity re.

E = €10 000 000D = €2 000 000WACC = 12.41%rd = 6%T = 25.8%
re = %
4.Medium
WACC = ?equityEre​ = 8%debtD = 1·Erd​ = 4%T = 28%

A company has a debt-to-equity ratio (at market values) of 1. Its cost of equity is 8%, its pre-tax cost of debt is 4% and the tax rate is 28%. Find the WACC.

D/E = 1re = 8%rd = 4%T = 28%
WACC = %
5.Hard
WACC = ?equity5 000 000 × €37.00β = 1.5rf​ = 4%, rm​ = 11%debt40 000 × €1 020rd​ = 5%T = 25%

A company has 5 000 000 shares at €37.00 each and 40 000 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 1.5, the risk-free rate 4% and the market return 11%. Find the WACC.

β = 1.5rf = 4%rm = 11%rd = 5%T = 25%
WACC = %
6.Hard
WACC = ?equity5 000 000 × €44.00β = 0.6rf​ = 2%, rm​ = 7.5%debt5 000 × €1 000rd​ = 7%T = 21%

A company has 5 000 000 shares at €44.00 each and 5 000 bonds trading at €1 000 each. The pre-tax cost of debt is 7% and the tax rate is 21%. The share’s beta is 0.6, the risk-free rate 2% and the market return 7.5%. Find the WACC.

β = 0.6rf = 2%rm = 7.5%rd = 7%T = 21%
WACC = %

Answer key

  1. 1. β = 0.6
  2. 2. rd·(1 − T) = 3.96 %
  3. 3. re = 14 %
  4. 4. WACC = 5.44 %
  5. 5. WACC = 12.56 %
  6. 6. WACC = 5.305 %

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