Financial Modeling, M&A 2024/2025
Exam Questions and Corresponding
Answers with Surety of 100% Pass Mark
Net Present Value (NPV) - 🧠ANSWER ✔✔Accept the project if NPV > 0.
This means the project creates value
Straight-Line Depreciation - 🧠ANSWER ✔✔Depreciation is not a cash flow
but reduces taxable income, resulting in a tax shield
After-Tax Cash Flow - 🧠ANSWER ✔✔After-tax cash flow = Revenue −
Expenses − Taxes
Taxes are calculated as:
Taxable Income = Revenue − COGS − Depreciation
Taxes = Taxable income × Tax rate
COPYRIGHT©PROFFKERRYMARTIN 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER: 619652435. TERMS OF USE.
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PRIVACY STATEMENT. ALL RIGHTS RESERVED
, Terminal Value (Salvage Value) - 🧠ANSWER ✔✔The value of the project
or asset at the end of its life, often including the proceeds from the sale of
the asset.
Key Point: Include tax on any gain/loss at the end of the life when
calculating salvage value.
Three different phases of project - 🧠ANSWER ✔✔Initial investment phase
Operating phase
Terminal phase
Initial Investment - 🧠ANSWER ✔✔Capitalized costs (treated as an asset)
Non-capitalized costs (expensed items)
Working Capital (inventory, receivables, etc)
Capitalized Costs - 🧠ANSWER ✔✔Costs that are recorded as an asset on
the balance sheet and then depreciated over the asset's life. These are
typically larger, long-term investments.
COPYRIGHT©PROFFKERRYMARTIN 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER: 619652435. TERMS OF USE.
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PRIVACY STATEMENT. ALL RIGHTS RESERVED
Exam Questions and Corresponding
Answers with Surety of 100% Pass Mark
Net Present Value (NPV) - 🧠ANSWER ✔✔Accept the project if NPV > 0.
This means the project creates value
Straight-Line Depreciation - 🧠ANSWER ✔✔Depreciation is not a cash flow
but reduces taxable income, resulting in a tax shield
After-Tax Cash Flow - 🧠ANSWER ✔✔After-tax cash flow = Revenue −
Expenses − Taxes
Taxes are calculated as:
Taxable Income = Revenue − COGS − Depreciation
Taxes = Taxable income × Tax rate
COPYRIGHT©PROFFKERRYMARTIN 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER: 619652435. TERMS OF USE.
1
PRIVACY STATEMENT. ALL RIGHTS RESERVED
, Terminal Value (Salvage Value) - 🧠ANSWER ✔✔The value of the project
or asset at the end of its life, often including the proceeds from the sale of
the asset.
Key Point: Include tax on any gain/loss at the end of the life when
calculating salvage value.
Three different phases of project - 🧠ANSWER ✔✔Initial investment phase
Operating phase
Terminal phase
Initial Investment - 🧠ANSWER ✔✔Capitalized costs (treated as an asset)
Non-capitalized costs (expensed items)
Working Capital (inventory, receivables, etc)
Capitalized Costs - 🧠ANSWER ✔✔Costs that are recorded as an asset on
the balance sheet and then depreciated over the asset's life. These are
typically larger, long-term investments.
COPYRIGHT©PROFFKERRYMARTIN 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER: 619652435. TERMS OF USE.
2
PRIVACY STATEMENT. ALL RIGHTS RESERVED
