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.

New worksheetPractise online with hints

For teachers: free to print, copy and use in class. Every new worksheet has new values and its own answer key. A link to ExamProblems on your course page is appreciated.

Name: ____________________   Date: ____________

1.Easy
years0123…9P0​ = €112.00D1​D2​D3​…D0​ = €3.20, g = 5%, re​ = ?

A company has just paid a dividend of €3.20 per share. Dividends are expected to grow by 5% per year forever, and the share price is €112.00. Use the dividend growth model to find the cost of equity re.

D0 = €3.20g = 5%P0 = €112.00
re = %
2.Easy
βr (%)SMLrf​ = 1.5%β = 1rm​ = 8.5%β = 0.6re​ = ?

The risk-free rate is 1.5%, the expected market return is 8.5% and a share has a beta of 0.6. Use CAPM to find the required return on the share re.

rf = 1.5%rm = 8.5%β = 0.6
re = %
3.Medium
WACC = 8.29%equity€4 000 000re​ = ?debt€2 000 000rd​ = 4%T = 28%

A company has equity worth €4 000 000 and debt worth €2 000 000. Its WACC is 8.29%, its pre-tax cost of debt is 4% and the tax rate is 28%. Find the cost of equity re.

E = €4 000 000D = €2 000 000WACC = 8.29%rd = 4%T = 28%
re = %
4.Medium
WACC = ?equity€8 000 000re​ = 9%debt€1 000 000rd​ = 3%T = 25.8%

A company has equity worth €8 000 000 and debt worth €1 000 000. Its cost of equity is 9%, its pre-tax cost of debt is 3% and the tax rate is 25.8%. Find the WACC.

E = €8 000 000D = €1 000 000re = 9%rd = 3%T = 25.8%
WACC = %
5.Hard
WACC = ?equity2 500 000 × €59.00β = 0.8rf​ = 2%, rm​ = 7%debt5 000 × €1 050rd​ = 4.5%T = 25.8%

A company has 2 500 000 shares at €59.00 each and 5 000 bonds trading at €1 050 each. The pre-tax cost of debt is 4.5% and the tax rate is 25.8%. The share’s beta is 0.8, the risk-free rate 2% and the market return 7%. Find the WACC.

β = 0.8rf = 2%rm = 7%rd = 4.5%T = 25.8%
WACC = %
6.Hard
rf​ = 1.5%, rm​ − rf​ = 5.5%no debtequityβU​ = 0.7D/E = 1.5equityre​ = ?debtT = 28%

A company's business has an unlevered (asset) beta of 0.7. It plans a debt-to-equity ratio of 1.5. The tax rate is 28%, the risk-free rate is 1.5% and the market risk premium is 5.5%. Find the cost of equity re at the new capital structure.

βU = 0.7D/E = 1.5T = 28%rf = 1.5%rm − rf = 5.5%
re = %

Answer key

  1. 1. re = 8 %
  2. 2. re = 5.7 %
  3. 3. re = 10.99 %
  4. 4. WACC = 8.247 %
  5. 5. WACC = 5.909 %
  6. 6. re = 9.508 %

Full step-by-step solutions: practise this topic on examproblems.com.