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
years0123…9P0​ = €56.00D1​D2​D3​…D0​ = €3.80, g = 3%, re​ = ?

A company has just paid a dividend of €3.80 per share. Dividends are expected to grow by 3% per year forever, and the share price is €56.00. Use the dividend growth model to find the cost of equity re.

D0 = €3.80g = 3%P0 = €56.00
re = %
2.Easy
years0123…9Pp​ = €99€6.00€6.00€6.00…rp​ = ?

A company's preferred shares pay a fixed dividend of €6.00 per year and trade at €99. The tax rate is 25%. Find the cost of preferred stock rp.

Dp = €6.00Pp = €99T = 25%
rp = %
3.Medium
WACC = ?equity€10 000 000re​ = 13%debt€6 000 000rd​ = 7%T = 25.8%

A company has equity worth €10 000 000 and debt worth €6 000 000. Its cost of equity is 13%, its pre-tax cost of debt is 7% and the tax rate is 25.8%. Find the WACC.

E = €10 000 000D = €6 000 000re = 13%rd = 7%T = 25.8%
WACC = %
4.Medium
WACC = ?ordinary shares€5 000 000re​ = 14%preferred shares€1 500 000rp​ = 6.5%debt€3 000 000rd​ = 3%T = 25.8%

A company is financed with ordinary shares worth €5 000 000, preferred shares worth €1 500 000 and debt worth €3 000 000. 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 = €5 000 000Ps = €1 500 000D = €3 000 000re = 14%rp = 6.5%rd = 3%T = 25.8%
WACC = %
5.Hard
WACC = ?equity1 000 000 × €40.50β = 1.8rf​ = 3.5%, rm​ = 8.5%debt40 000 × €1 020rd​ = 6%T = 21%

A company has 1 000 000 shares at €40.50 each and 40 000 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 1.8, the risk-free rate 3.5% and the market return 8.5%. Find the WACC.

β = 1.8rf = 3.5%rm = 8.5%rd = 6%T = 21%
WACC = %
6.Hard
WACC = ?equity1 000 000 × €42.00β = 0.8rf​ = 3%, rm​ = 8.5%debt10 000 × €1 020rd​ = 3%T = 28%

A company has 1 000 000 shares at €42.00 each and 10 000 bonds trading at €1 020 each. The pre-tax cost of debt is 3% and the tax rate is 28%. The share’s beta is 0.8, the risk-free rate 3% and the market return 8.5%. Find the WACC.

β = 0.8rf = 3%rm = 8.5%rd = 3%T = 28%
WACC = %

Answer key

  1. 1. re = 9.989 %
  2. 2. rp = 6.061 %
  3. 3. WACC = 10.07 %
  4. 4. WACC = 9.098 %
  5. 5. WACC = 8.606 %
  6. 6. WACC = 6.376 %

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