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​ = 9%β = 1.1re​ = ?

The risk-free rate is 4%, the expected market return is 9% and a share has a beta of 1.1. Use CAPM to find the required return on the share re.

rf = 4%rm = 9%β = 1.1
re = %
2.Easy
βr (%)SMLrf​ = 3%β = 1rm​ = 7%β = 1.3re​ = ?

The risk-free rate is 3%, the expected market return is 7% and a share has a beta of 1.3. Use CAPM to find the required return on the share re.

rf = 3%rm = 7%β = 1.3
re = %
3.Medium
WACC = ?equity€10 000 000re​ = 14%debt€3 000 000rd​ = 6%T = 21%

A company has equity worth €10 000 000 and debt worth €3 000 000. Its cost of equity is 14%, its pre-tax cost of debt is 6% and the tax rate is 21%. Find the WACC.

E = €10 000 000D = €3 000 000re = 14%rd = 6%T = 21%
WACC = %
4.Medium
WACC = ?ordinary shares€12 000 000re​ = 12%preferred shares€500 000rp​ = 8%debt€4 000 000rd​ = 4.5%T = 20%

A company is financed with ordinary shares worth €12 000 000, preferred shares worth €500 000 and debt worth €4 000 000. The cost of equity is 12%, the cost of preferred stock 8% and the pre-tax cost of debt 4.5%. The tax rate is 20%. Find the WACC.

E = €12 000 000Ps = €500 000D = €4 000 000re = 12%rp = 8%rd = 4.5%T = 20%
WACC = %
5.Hard
WACC = ?equity1 000 000 × €55.50β = 1.2rf​ = 3%, rm​ = 8.5%debt10 000 × €1 020rd​ = 4%T = 25.8%

A company has 1 000 000 shares at €55.50 each and 10 000 bonds trading at €1 020 each. The pre-tax cost of debt is 4% and the tax rate is 25.8%. The share’s beta is 1.2, the risk-free rate 3% and the market return 8.5%. Find the WACC.

β = 1.2rf = 3%rm = 8.5%rd = 4%T = 25.8%
WACC = %
6.Hard
WACC = ?equity2 500 000 × €54.50β = 1.2rf​ = 1%, rm​ = 5%debt20 000 × €1 020rd​ = 5%T = 30%

A company has 2 500 000 shares at €54.50 each and 20 000 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 1.2, the risk-free rate 1% and the market return 5%. Find the WACC.

β = 1.2rf = 1%rm = 5%rd = 5%T = 30%
WACC = %

Answer key

  1. 1. re = 9.5 %
  2. 2. re = 8.2 %
  3. 3. WACC = 11.86 %
  4. 4. WACC = 9.842 %
  5. 5. WACC = 8.57 %
  6. 6. WACC = 5.5 %

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