2024 Trading Comps Modeling Exam Wall Street Prep / Wall Street Prep Premium Exam Transaction Comps Modeling Wall Street Prep Exam GRADED A+

2024 Trading Comps Modeling Exam Wall Street Prep / Wall Street Prep Premium Exam Transaction Comps Modeling Wall Street Prep Exam GRADED A+ the terminal value of a business that grows indefinitely is calculated as follows - ANSWER-cash flow from period "t+1" divided by (discount rate-growth rate) the two-stage DCF model is: - ANSWER-where stage 1 is an explicit projection of free cash flows (generally for 5-10 years), and stage 2 is a lump-sum estimate of the cash flows beyond the explicit forecast period disadvantages of a DCF do not include - ANSWER-free cash flows over the first 5-10 year period represent a significant portion of value and are highly sensitive to valuation assumptions the typical sell-side process - ANSWER-shorter than the buy side, buyer secures financing, and doesn't involve id'ing potential issues to address such as ownership and unusual equity structures, liabilities, etc. While equity contribution went as low as the single digits in the 1980's, the current split between equity and debt in an LBO deal is best characterized as: - ANSWER-Equity - 35%; Debt 65% What is generally not considered to be a pre-tax non-recurring (unusual or infrequent) item? - ANSWER-Extraordinary gains/losses what is false about depreciation and amortization - ANSWERD&A may be classified within interest expense Company X's current assets increased by $40 million from 2007- 2008 while the companies current liabilities increased by $25