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
Dloans€10 000 000I = €550 000tax savingT = 25%interest after tax?rd​·(1 − T) = ?

A company has loans of €10 000 000 on which it pays €550 000 interest per year. The tax rate is 25%. Find the after-tax cost of debt rd·(1 − T) in percent.

D = €10 000 000I = €550 000T = 25%
rd·(1 − T) = %
2.Easy
βr (%)SMLrf​ = 2.5%β = 1rm​ = 9.5%β = 0.8re​ = ?

The risk-free rate is 2.5%, the expected market return is 9.5% and a share has a beta of 0.8. Use CAPM to find the required return on the share re.

rf = 2.5%rm = 9.5%β = 0.8
re = %
3.Medium
WACC = ?equityEre​ = 14%debtD = 0.6·Erd​ = 5%T = 28%

A company has a debt-to-equity ratio (at market values) of 0.6. Its cost of equity is 14%, its pre-tax cost of debt is 5% and the tax rate is 28%. Find the WACC.

D/E = 0.6re = 14%rd = 5%T = 28%
WACC = %
4.Medium
WACC = 6.79%equity€5 000 000re​ = ?debt€2 000 000rd​ = 5%T = 25%

A company has equity worth €5 000 000 and debt worth €2 000 000. Its WACC is 6.79%, its pre-tax cost of debt is 5% and the tax rate is 25%. Find the cost of equity re.

E = €5 000 000D = €2 000 000WACC = 6.79%rd = 5%T = 25%
re = %
5.Hard
WACC = ?equity5 000 000 × €35.00β = 0.6rf​ = 3.5%, rm​ = 9.5%debt20 000 × €1 020rd​ = 6%T = 21%

A company has 5 000 000 shares at €35.00 each and 20 000 bonds trading at €1 020 each. The pre-tax cost of debt is 6% and the tax rate is 21%. The share’s beta is 0.6, the risk-free rate 3.5% and the market return 9.5%. Find the WACC.

β = 0.6rf = 3.5%rm = 9.5%rd = 6%T = 21%
WACC = %
6.Hard
WACC = ?equity2 500 000 × €32.50β = 1.8rf​ = 3%, rm​ = 9.5%debt5 000 × €1 020rd​ = 4%T = 25%

A company has 2 500 000 shares at €32.50 each and 5 000 bonds trading at €1 020 each. The pre-tax cost of debt is 4% and the tax rate is 25%. The share’s beta is 1.8, the risk-free rate 3% and the market return 9.5%. Find the WACC.

β = 1.8rf = 3%rm = 9.5%rd = 4%T = 25%
WACC = %

Answer key

  1. 1. rd·(1 − T) = 4.125 %
  2. 2. re = 8.1 %
  3. 3. WACC = 10.1 %
  4. 4. re = 8.006 %
  5. 5. WACC = 6.854 %
  6. 6. WACC = 14.01 %

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