WALLSTREET PREP |
DISCOUNTED CASH FLOW MODEL
EXAM
QUESTIONS WITH COMPLETE
SOLUTIONS
, QUESTION 1
The next two questions use the data below. The data will be repeated on the next question: You have been
tasked with building a stand-alone DCF valuation for Milner Beverages, a publicly traded company, using
the unlevered two-stage approach. You calculate the following:
$ in millions 2 2 2 2 2 2 2
017 018 019 020 021 022 023
Unlevered free cash 1 1 1 1 2 2 2
flow 10.0 20.0 50. 70.0 00.0 50.0 80.0
0
In addition, you calculate the following: WACC = 8.00% Perpetuity growth rate (annual growth rate of
unlevered free cash flows after 2023) = 3.00% Calculate enterprise value at the beginning of 2017
assuming all cash flows occur at year-end. Use whole numbers (i.e. 1 year exactly equals 1 period when
calculating returns and discounting).
$4,173.30
$4,271.40
$4,540.60
$6,505.80
$6,673.80
QUESTION 2
This question uses the same data as the previous question, shown below. You have been tasked with
building a stand-alone DCF valuation for Milner Beverages, a publicly traded company, using the
unlevered two-stage approach. You calculate the following:
$ in millions 2 2 2 2 2 2 2
017 018 019 020 021 022 023
Unlevered free cash 1 1 1 1 2 2 2
flow 10.0 20.0 50.0 70.0 00.0 50.0 80.0
In addition, you calculate the following:
DISCOUNTED CASH FLOW MODEL
EXAM
QUESTIONS WITH COMPLETE
SOLUTIONS
, QUESTION 1
The next two questions use the data below. The data will be repeated on the next question: You have been
tasked with building a stand-alone DCF valuation for Milner Beverages, a publicly traded company, using
the unlevered two-stage approach. You calculate the following:
$ in millions 2 2 2 2 2 2 2
017 018 019 020 021 022 023
Unlevered free cash 1 1 1 1 2 2 2
flow 10.0 20.0 50. 70.0 00.0 50.0 80.0
0
In addition, you calculate the following: WACC = 8.00% Perpetuity growth rate (annual growth rate of
unlevered free cash flows after 2023) = 3.00% Calculate enterprise value at the beginning of 2017
assuming all cash flows occur at year-end. Use whole numbers (i.e. 1 year exactly equals 1 period when
calculating returns and discounting).
$4,173.30
$4,271.40
$4,540.60
$6,505.80
$6,673.80
QUESTION 2
This question uses the same data as the previous question, shown below. You have been tasked with
building a stand-alone DCF valuation for Milner Beverages, a publicly traded company, using the
unlevered two-stage approach. You calculate the following:
$ in millions 2 2 2 2 2 2 2
017 018 019 020 021 022 023
Unlevered free cash 1 1 1 1 2 2 2
flow 10.0 20.0 50.0 70.0 00.0 50.0 80.0
In addition, you calculate the following:
