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
Dloans€20 000 000I = €800 000tax savingT = 28%interest after tax?rd​·(1 − T) = ?

A company has loans of €20 000 000 on which it pays €800 000 interest per year. The tax rate is 28%. Find the after-tax cost of debt rd·(1 − T) in percent.

D = €20 000 000I = €800 000T = 28%
rd·(1 − T) = %
2.Easy
βr (%)SMLrf​ = 4%β = 1rm​ = 8%β = 0.8re​ = ?

The risk-free rate is 4%, the expected market return is 8% and a share has a beta of 0.8. Use CAPM to find the required return on the share re.

rf = 4%rm = 8%β = 0.8
re = %
3.Medium
WACC = ?equityEre​ = 10%debtD = 0.75·Erd​ = 4.5%T = 30%

A company has a debt-to-equity ratio (at market values) of 0.75. Its cost of equity is 10%, its pre-tax cost of debt is 4.5% and the tax rate is 30%. Find the WACC.

D/E = 0.75re = 10%rd = 4.5%T = 30%
WACC = %
4.Medium
WACC = 7.8%equity€4 000 000re​ = ?debt€1 000 000rd​ = 4%T = 25%

A company has equity worth €4 000 000 and debt worth €1 000 000. Its WACC is 7.8%, its pre-tax cost of debt is 4% and the tax rate is 25%. Find the cost of equity re.

E = €4 000 000D = €1 000 000WACC = 7.8%rd = 4%T = 25%
re = %
5.Hard
WACC = ?equity5 000 000 × €23.00β = 0.6rf​ = 4%, rm​ = 10%debt40 000 × €1 050rd​ = 4.5%T = 28%

A company has 5 000 000 shares at €23.00 each and 40 000 bonds trading at €1 050 each. The pre-tax cost of debt is 4.5% and the tax rate is 28%. The share’s beta is 0.6, the risk-free rate 4% and the market return 10%. Find the WACC.

β = 0.6rf = 4%rm = 10%rd = 4.5%T = 28%
WACC = %
6.Hard
WACC = ?equity5 000 000 × €24.50β = 1.1rf​ = 2%, rm​ = 7.5%debt5 000 × €980rd​ = 7%T = 30%

A company has 5 000 000 shares at €24.50 each and 5 000 bonds trading at €980 each. The pre-tax cost of debt is 7% and the tax rate is 30%. The share’s beta is 1.1, the risk-free rate 2% and the market return 7.5%. Find the WACC.

β = 1.1rf = 2%rm = 7.5%rd = 7%T = 30%
WACC = %

Answer key

  1. 1. rd·(1 − T) = 2.88 %
  2. 2. re = 7.2 %
  3. 3. WACC = 7.064 %
  4. 4. re = 9 %
  5. 5. WACC = 6.434 %
  6. 6. WACC = 7.929 %

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