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​ = €27.00D1​D2​D3​…D0​ = €2.10, g = 3%, re​ = ?

A company has just paid a dividend of €2.10 per share. Dividends are expected to grow by 3% per year forever, and the share price is €27.00. Use the dividend growth model to find the cost of equity re.

D0 = €2.10g = 3%P0 = €27.00
re = %
2.Easy
βr (%)SMLrf​ = 1%β = 1rm​ = 5.5%β = 0.6re​ = ?

The risk-free rate is 1%, the expected market return is 5.5% and a share has a beta of 0.6. Use CAPM to find the required return on the share re.

rf = 1%rm = 5.5%β = 0.6
re = %
3.Medium
WACC = ?equityEre​ = 8%debtD = 0.4·Erd​ = 3%T = 20%

A company has a debt-to-equity ratio (at market values) of 0.4. Its cost of equity is 8%, its pre-tax cost of debt is 3% and the tax rate is 20%. Find the WACC.

D/E = 0.4re = 8%rd = 3%T = 20%
WACC = %
4.Medium
WACC = ?equity€3 000 000re​ = 8%debt€6 000 000rd​ = 4.5%T = 21%

A company has equity worth €3 000 000 and debt worth €6 000 000. Its cost of equity is 8%, its pre-tax cost of debt is 4.5% and the tax rate is 21%. Find the WACC.

E = €3 000 000D = €6 000 000re = 8%rd = 4.5%T = 21%
WACC = %
5.Hard
WACC = ?equity2 500 000 × €40.50β = 1.8rf​ = 2.5%, rm​ = 8%debt5 000 × €1 050rd​ = 5%T = 21%

A company has 2 500 000 shares at €40.50 each and 5 000 bonds trading at €1 050 each. The pre-tax cost of debt is 5% and the tax rate is 21%. The share’s beta is 1.8, the risk-free rate 2.5% and the market return 8%. Find the WACC.

β = 1.8rf = 2.5%rm = 8%rd = 5%T = 21%
WACC = %
6.Hard
WACC = ?equity2 000 000 × €16.00β = 0.6rf​ = 1%, rm​ = 8%debt5 000 × €1 050rd​ = 3.5%T = 20%

A company has 2 000 000 shares at €16.00 each and 5 000 bonds trading at €1 050 each. The pre-tax cost of debt is 3.5% and the tax rate is 20%. The share’s beta is 0.6, the risk-free rate 1% and the market return 8%. Find the WACC.

β = 0.6rf = 1%rm = 8%rd = 3.5%T = 20%
WACC = %

Answer key

  1. 1. re = 11.01 %
  2. 2. re = 3.7 %
  3. 3. WACC = 6.4 %
  4. 4. WACC = 5.037 %
  5. 5. WACC = 11.98 %
  6. 6. WACC = 4.862 %

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