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​ = 2.5%β = 1rm​ = 7.5%β = ?re​ = 5%

Investors require a return of 5% on a share. The risk-free rate is 2.5% and the expected market return is 7.5%. Use CAPM to find the beta β of the share.

re = 5%rf = 2.5%rm = 7.5%
β =
2.Easy
βr (%)SMLrf​ = 2.5%β = 1rm​ = 6.5%β = 0.9re​ = ?

The risk-free rate is 2.5%, the expected market return is 6.5% and a share has a beta of 0.9. Use CAPM to find the required return on the share re.

rf = 2.5%rm = 6.5%β = 0.9
re = %
3.Medium
WACC = ?equity€4 000 000re​ = 11%debt€5 000 000rd​ = 5%T = 30%

A company has equity worth €4 000 000 and debt worth €5 000 000. Its cost of equity is 11%, its pre-tax cost of debt is 5% and the tax rate is 30%. Find the WACC.

E = €4 000 000D = €5 000 000re = 11%rd = 5%T = 30%
WACC = %
4.Medium
WACC = ?ordinary shares€4 000 000re​ = 14%preferred shares€500 000rp​ = 6.5%debt€6 000 000rd​ = 3%T = 25.8%

A company is financed with ordinary shares worth €4 000 000, preferred shares worth €500 000 and debt worth €6 000 000. The cost of equity is 14%, the cost of preferred stock 6.5% and the pre-tax cost of debt 3%. The tax rate is 25.8%. Find the WACC.

E = €4 000 000Ps = €500 000D = €6 000 000re = 14%rp = 6.5%rd = 3%T = 25.8%
WACC = %
5.Hard
WACC = ?equity5 000 000 × €17.00β = 0.6rf​ = 2.5%, rm​ = 8%debt40 000 × €1 000rd​ = 3.5%T = 25.8%

A company has 5 000 000 shares at €17.00 each and 40 000 bonds trading at €1 000 each. The pre-tax cost of debt is 3.5% and the tax rate is 25.8%. The share’s beta is 0.6, the risk-free rate 2.5% and the market return 8%. Find the WACC.

β = 0.6rf = 2.5%rm = 8%rd = 3.5%T = 25.8%
WACC = %
6.Hard
WACC = ?equity4 000 000 × €49.00D0​ = €1.60g = 5%debt€156 800 000rd​ = 4%T = 28%

A company has 4 000 000 shares trading at €49.00; the book value of its equity is €78 400 000. It just paid a dividend of €1.60 per share, and dividends grow by 5% per year. Its debt has a market value of €156 800 000 and a pre-tax cost of 4%. The tax rate is 28%. Find the WACC, using the dividend growth model for the cost of equity.

N = 4 000 000P0 = €49.00book equity = €78 400 000D0 = €1.60g = 5%D = €156 800 000rd = 4%T = 28%
WACC = %

Answer key

  1. 1. β = 0.5
  2. 2. re = 6.1 %
  3. 3. WACC = 6.833 %
  4. 4. WACC = 6.915 %
  5. 5. WACC = 4.775 %
  6. 6. WACC = 5.963 %

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