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
βr (%)SMLrf​ = 1%β = 1rm​ = 6%β = 1.5re​ = ?

The risk-free rate is 1%, the expected market return is 6% and a share has a beta of 1.5. Use CAPM to find the required return on the share re.

rf = 1%rm = 6%β = 1.5
re = %
2.Easy
years0123…9Pp​ = €45€3.00€3.00€3.00…rp​ = ?

A company's preferred shares pay a fixed dividend of €3.00 per year and trade at €45. The tax rate is 25%. Find the cost of preferred stock rp.

Dp = €3.00Pp = €45T = 25%
rp = %
3.Medium
WACC = ?equity€6 000 000re​ = 12%debt€5 000 000rd​ = 4%T = 30%

A company has equity worth €6 000 000 and debt worth €5 000 000. Its cost of equity is 12%, its pre-tax cost of debt is 4% and the tax rate is 30%. Find the WACC.

E = €6 000 000D = €5 000 000re = 12%rd = 4%T = 30%
WACC = %
4.Medium
WACC = ?equity€10 000 000re​ = 8%debt€1 000 000rd​ = 4%T = 28%

A company has equity worth €10 000 000 and debt worth €1 000 000. Its cost of equity is 8%, its pre-tax cost of debt is 4% and the tax rate is 28%. Find the WACC.

E = €10 000 000D = €1 000 000re = 8%rd = 4%T = 28%
WACC = %
5.Hard
WACC = ?equity€5 000 000re​ = 14%bonds2 000 × €930coupon 6%, n = 10T = 25%

A company has equity with a market value of €5 000 000 and a cost of equity of 14%. Its debt consists of 2 000 bonds (face value €1 000, annual coupon 6%, 10 years to maturity) that trade at €930 each. The tax rate is 25%. Find the WACC, using the yield to maturity of the bonds as the pre-tax cost of debt.

E = €5 000 000re = 14%bonds: 2 000 × €930coupon = 6%n = 10T = 25%
WACC = %
6.Hard
WACC = ?equity2 000 000 × €59.50β = 0.6rf​ = 4%, rm​ = 10.5%debt10 000 × €1 020rd​ = 3%T = 25.8%

A company has 2 000 000 shares at €59.50 each and 10 000 bonds trading at €1 020 each. The pre-tax cost of debt is 3% and the tax rate is 25.8%. The share’s beta is 0.6, the risk-free rate 4% and the market return 10.5%. Find the WACC.

β = 0.6rf = 4%rm = 10.5%rd = 3%T = 25.8%
WACC = %

Answer key

  1. 1. re = 8.5 %
  2. 2. rp = 6.667 %
  3. 3. WACC = 7.818 %
  4. 4. WACC = 7.535 %
  5. 5. WACC = 11.63 %
  6. 6. WACC = 7.452 %

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