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​ = €15.50D1​D2​D3​…D0​ = €1.20, g = 4%, re​ = ?

A company has just paid a dividend of €1.20 per share. Dividends are expected to grow by 4% per year forever, and the share price is €15.50. Use the dividend growth model to find the cost of equity re.

D0 = €1.20g = 4%P0 = €15.50
re = %
2.Easy
Dloans€2 000 000I = €70 000tax savingT = 25.8%interest after tax?rd​·(1 − T) = ?

A company has loans of €2 000 000 on which it pays €70 000 interest per year. The tax rate is 25.8%. Find the after-tax cost of debt rd·(1 − T) in percent.

D = €2 000 000I = €70 000T = 25.8%
rd·(1 − T) = %
3.Medium
WACC = ?equity€2 000 000re​ = 12%debt€6 000 000rd​ = 6%T = 28%

A company has equity worth €2 000 000 and debt worth €6 000 000. Its cost of equity is 12%, its pre-tax cost of debt is 6% and the tax rate is 28%. Find the WACC.

E = €2 000 000D = €6 000 000re = 12%rd = 6%T = 28%
WACC = %
4.Medium
WACC = 8%equity€4 000 000re​ = ?debt€5 000 000rd​ = 5%T = 20%

A company has equity worth €4 000 000 and debt worth €5 000 000. Its WACC is 8%, its pre-tax cost of debt is 5% and the tax rate is 20%. Find the cost of equity re.

E = €4 000 000D = €5 000 000WACC = 8%rd = 5%T = 20%
re = %
5.Hard
WACC = ?equity€5 000 000re​ = 11%bonds2 000 × €1 070coupon 4%, n = 5T = 21%

A company has equity with a market value of €5 000 000 and a cost of equity of 11%. Its debt consists of 2 000 bonds (face value €1 000, annual coupon 4%, 5 years to maturity) that trade at €1 070 each. The tax rate is 21%. Find the WACC, using the yield to maturity of the bonds as the pre-tax cost of debt.

E = €5 000 000re = 11%bonds: 2 000 × €1 070coupon = 4%n = 5T = 21%
WACC = %
6.Hard
WACC = ?equity5 000 000 × €20.00β = 1.3rf​ = 3%, rm​ = 10%debt5 000 × €1 020rd​ = 5%T = 30%

A company has 5 000 000 shares at €20.00 each and 5 000 bonds trading at €1 020 each. The pre-tax cost of debt is 5% and the tax rate is 30%. The share’s beta is 1.3, the risk-free rate 3% and the market return 10%. Find the WACC.

β = 1.3rf = 3%rm = 10%rd = 5%T = 30%
WACC = %

Answer key

  1. 1. re = 12.05 %
  2. 2. rd·(1 − T) = 2.597 %
  3. 3. WACC = 6.24 %
  4. 4. re = 13 %
  5. 5. WACC = 8.294 %
  6. 6. WACC = 11.68 %

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