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​ = 4%β = 1rm​ = 11%β = 1.8re​ = ?

The risk-free rate is 4%, the expected market return is 11% and a share has a beta of 1.8. Use CAPM to find the required return on the share re.

rf = 4%rm = 11%β = 1.8
re = %
2.Easy
βr (%)SMLrf​ = 1%β = 1rm​ = 7.5%β = 1.5re​ = ?

The risk-free rate is 1%, the expected market return is 7.5% and a share has a beta of 1.5. Use CAPM to find the required return on the share re.

rf = 1%rm = 7.5%β = 1.5
re = %
3.Medium
WACC = ?equity€5 000 000re​ = 12%debt€5 000 000rd​ = 3.5%T = 25%

A company has equity worth €5 000 000 and debt worth €5 000 000. Its cost of equity is 12%, its pre-tax cost of debt is 3.5% and the tax rate is 25%. Find the WACC.

E = €5 000 000D = €5 000 000re = 12%rd = 3.5%T = 25%
WACC = %
4.Medium
WACC = ?equity€2 000 000re​ = 10%debt€2 000 000rd​ = 7%T = 20%

A company has equity worth €2 000 000 and debt worth €2 000 000. Its cost of equity is 10%, its pre-tax cost of debt is 7% and the tax rate is 20%. Find the WACC.

E = €2 000 000D = €2 000 000re = 10%rd = 7%T = 20%
WACC = %
5.Hard
rf​ = 1%, rm​ − rf​ = 5%no debtequityβU​ = 0.6D/E = 0.6equityre​ = ?debtT = 25.8%

A company's business has an unlevered (asset) beta of 0.6. It plans a debt-to-equity ratio of 0.6. The tax rate is 25.8%, the risk-free rate is 1% and the market risk premium is 5%. Find the cost of equity re at the new capital structure.

βU = 0.6D/E = 0.6T = 25.8%rf = 1%rm − rf = 5%
re = %
6.Hard
WACC = ?equity4 000 000 × €8.00β = 1.8rf​ = 1%, rm​ = 5.5%debt40 000 × €1 000rd​ = 7%T = 21%

A company has 4 000 000 shares at €8.00 each and 40 000 bonds trading at €1 000 each. The pre-tax cost of debt is 7% and the tax rate is 21%. The share’s beta is 1.8, the risk-free rate 1% and the market return 5.5%. Find the WACC.

β = 1.8rf = 1%rm = 5.5%rd = 7%T = 21%
WACC = %

Answer key

  1. 1. re = 16.6 %
  2. 2. re = 10.75 %
  3. 3. WACC = 7.313 %
  4. 4. WACC = 7.8 %
  5. 5. re = 5.336 %
  6. 6. WACC = 7.117 %

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