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​ = 1.5%β = 1rm​ = 7.5%β = 0.6re​ = ?

The risk-free rate is 1.5%, the expected market return is 7.5% and a share has a beta of 0.6. Use CAPM to find the required return on the share re.

rf = 1.5%rm = 7.5%β = 0.6
re = %
2.Easy
βr (%)SMLrf​ = 4%β = 1rm​ = 9.5%β = 1.8re​ = ?

The risk-free rate is 4%, the expected market return is 9.5% and a share has a beta of 1.8. Use CAPM to find the required return on the share re.

rf = 4%rm = 9.5%β = 1.8
re = %
3.Medium
WACC = ?equity€3 000 000re​ = 8%debt€3 000 000rd​ = 6%T = 20%

A company has equity worth €3 000 000 and debt worth €3 000 000. Its cost of equity is 8%, its pre-tax cost of debt is 6% and the tax rate is 20%. Find the WACC.

E = €3 000 000D = €3 000 000re = 8%rd = 6%T = 20%
WACC = %
4.Medium
WACC = ?ordinary shares€5 000 000re​ = 11%preferred shares€1 500 000rp​ = 7.5%debt€6 000 000rd​ = 4.5%T = 28%

A company is financed with ordinary shares worth €5 000 000, preferred shares worth €1 500 000 and debt worth €6 000 000. The cost of equity is 11%, the cost of preferred stock 7.5% and the pre-tax cost of debt 4.5%. The tax rate is 28%. Find the WACC.

E = €5 000 000Ps = €1 500 000D = €6 000 000re = 11%rp = 7.5%rd = 4.5%T = 28%
WACC = %
5.Hard
rf​ = 1%, rm​ − rf​ = 5.5%no debtequityβU​ = 0.7D/E = 1equityre​ = ?debtT = 25.8%

A company's business has an unlevered (asset) beta of 0.7. It plans a debt-to-equity ratio of 1. The tax rate is 25.8%, the risk-free rate is 1% and the market risk premium is 5.5%. Find the cost of equity re at the new capital structure.

βU = 0.7D/E = 1T = 25.8%rf = 1%rm − rf = 5.5%
re = %
6.Hard
rf​ = 2%, rm​ − rf​ = 6.5%no debtequityβU​ = 0.6D/E = 0.5equityre​ = ?debtT = 25.8%

A company's business has an unlevered (asset) beta of 0.6. It plans a debt-to-equity ratio of 0.5. The tax rate is 25.8%, the risk-free rate is 2% and the market risk premium is 6.5%. Find the cost of equity re at the new capital structure.

βU = 0.6D/E = 0.5T = 25.8%rf = 2%rm − rf = 6.5%
re = %

Answer key

  1. 1. re = 5.1 %
  2. 2. re = 13.9 %
  3. 3. WACC = 6.4 %
  4. 4. WACC = 6.855 %
  5. 5. re = 7.707 %
  6. 6. re = 7.347 %

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