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
βr (%)SMLrf​ = 3.5%β = 1rm​ = 8.5%β = 1.2re​ = ?

The risk-free rate is 3.5%, the expected market return is 8.5% and a share has a beta of 1.2. Use CAPM to find the required return on the share re.

rf = 3.5%rm = 8.5%β = 1.2
re = %
2.Easy
years0123…9Pp​ = €56€5.50€5.50€5.50…rp​ = ?

A company's preferred shares pay a fixed dividend of €5.50 per year and trade at €56. The tax rate is 28%. Find the cost of preferred stock rp.

Dp = €5.50Pp = €56T = 28%
rp = %
3.Medium
WACC = ?equity€10 000 000re​ = 11%debt€6 000 000rd​ = 3.5%T = 25%

A company has equity worth €10 000 000 and debt worth €6 000 000. Its cost of equity is 11%, its pre-tax cost of debt is 3.5% and the tax rate is 25%. Find the WACC.

E = €10 000 000D = €6 000 000re = 11%rd = 3.5%T = 25%
WACC = %
4.Medium
WACC = ?equity€2 000 000re​ = 10%debt€4 000 000rd​ = 4.5%T = 25.8%

A company has equity worth €2 000 000 and debt worth €4 000 000. Its cost of equity is 10%, its pre-tax cost of debt is 4.5% and the tax rate is 25.8%. Find the WACC.

E = €2 000 000D = €4 000 000re = 10%rd = 4.5%T = 25.8%
WACC = %
5.Hard
WACC = ?equity4 000 000 × €31.50β = 1.5rf​ = 3.5%, rm​ = 8.5%debt20 000 × €980rd​ = 7%T = 25%

A company has 4 000 000 shares at €31.50 each and 20 000 bonds trading at €980 each. The pre-tax cost of debt is 7% and the tax rate is 25%. The share’s beta is 1.5, the risk-free rate 3.5% and the market return 8.5%. Find the WACC.

β = 1.5rf = 3.5%rm = 8.5%rd = 7%T = 25%
WACC = %
6.Hard
WACC = ?equity€5 000 000re​ = 9%bonds2 000 × €983coupon 6%, n = 4T = 25%

A company has equity with a market value of €5 000 000 and a cost of equity of 9%. Its debt consists of 2 000 bonds (face value €1 000, annual coupon 6%, 4 years to maturity) that trade at €983 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 = 9%bonds: 2 000 × €983coupon = 6%n = 4T = 25%
WACC = %

Answer key

  1. 1. re = 9.5 %
  2. 2. rp = 9.821 %
  3. 3. WACC = 7.859 %
  4. 4. WACC = 5.559 %
  5. 5. WACC = 10.23 %
  6. 6. WACC = 7.835 %

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