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​ = €19.50D1​D2​D3​…D0​ = €1.50, g = 4%, re​ = ?

A company has just paid a dividend of €1.50 per share. Dividends are expected to grow by 4% per year forever, and the share price is €19.50. Use the dividend growth model to find the cost of equity re.

D0 = €1.50g = 4%P0 = €19.50
re = %
2.Easy
years0123…9P0​ = €29.50D1​D2​D3​…D0​ = €1.40, g = 6%, re​ = ?

A company has just paid a dividend of €1.40 per share. Dividends are expected to grow by 6% per year forever, and the share price is €29.50. Use the dividend growth model to find the cost of equity re.

D0 = €1.40g = 6%P0 = €29.50
re = %
3.Medium
WACC = ?equity€8 000 000re​ = 12%debt€6 000 000rd​ = 7%T = 20%

A company has equity worth €8 000 000 and debt worth €6 000 000. Its cost of equity is 12%, its pre-tax cost of debt is 7% and the tax rate is 20%. Find the WACC.

E = €8 000 000D = €6 000 000re = 12%rd = 7%T = 20%
WACC = %
4.Medium
WACC = ?equityEre​ = 13%debtD = 0.4·Erd​ = 3.5%T = 30%

A company has a debt-to-equity ratio (at market values) of 0.4. Its cost of equity is 13%, its pre-tax cost of debt is 3.5% and the tax rate is 30%. Find the WACC.

D/E = 0.4re = 13%rd = 3.5%T = 30%
WACC = %
5.Hard
WACC = ?equity2 500 000 × €46.00β = 1.2rf​ = 2.5%, rm​ = 9%debt40 000 × €980rd​ = 6%T = 30%

A company has 2 500 000 shares at €46.00 each and 40 000 bonds trading at €980 each. The pre-tax cost of debt is 6% and the tax rate is 30%. The share’s beta is 1.2, the risk-free rate 2.5% and the market return 9%. Find the WACC.

β = 1.2rf = 2.5%rm = 9%rd = 6%T = 30%
WACC = %
6.Hard
rf​ = 2%, rm​ − rf​ = 5.5%no debtequityβU​ = 0.9D/E = 0.25equityre​ = ?debtT = 30%

A company's business has an unlevered (asset) beta of 0.9. It plans a debt-to-equity ratio of 0.25. The tax rate is 30%, the risk-free rate is 2% and the market risk premium is 5.5%. Find the cost of equity re at the new capital structure.

βU = 0.9D/E = 0.25T = 30%rf = 2%rm − rf = 5.5%
re = %

Answer key

  1. 1. re = 12 %
  2. 2. re = 11.03 %
  3. 3. WACC = 9.257 %
  4. 4. WACC = 9.986 %
  5. 5. WACC = 8.749 %
  6. 6. re = 7.816 %

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