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LBO Modeling Exam from Wall Street Prep(NEW UPDATED VERSION) LATEST ACTUAL
EXAM QUESTIONS AND CORRECT ANSWERS (VERIFIED QUESTIONS AND ANSWERS) |
GUARANTEED PASS A+ UPDATED 2026
1. What is the primary purpose of an LBO model?
A) To value a company using DCF
B) To assess the feasibility of a leveraged acquisition
C) To analyze marketing impacts
D) To calculate tax liabilities
Answer: B
2. In an LBO, the “Sources & Uses” table shows:
A) Cash flows over time
B) Debt and equity funding sources and how they are deployed
C) Operating costs only
D) Projected revenues
Answer: B
2026 2027 GRADED A+
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3. Equity value in an LBO is calculated as:
A) Enterprise value – net debt
B) Enterprise value + net debt
C) Free cash flow × multiple
D) Only shareholder equity reported
Answer: A
4. A rollover equity percentage in an LBO represents:
A) Management’s retained ownership post-transaction
B) Debt obligations
C) Preferred securities
D) Future cash receipts
Answer: A
5. The target company’s enterprise value is typically based on:
A) Book value only
B) EBITDA × entry multiple
C) Revenue × current ratio
D) Net income × P/E ratio
Answer: B
6. MOIC stands for:
A) Multiple of Invested Capital
B) Market of Internal Comparison
C) Margin Over Investment Cost
D) Multiple on Interest Cover
Answer: A
7. IRR is best described as:
A) Debt to equity ratio
B) Internal Rate of Return
C) Interest rate revision
D) Initial revenue return
Answer: B
8. A higher exit multiple generally results in:
A) Lower IRR
B. Higher IRR
C. No impact on returns
D. Lower MOIC
Answer: B
9. Debt sweep means:
A) Using all excess cash flows to pay down debt
B) Selling company assets immediately
C) Reinvesting operating income
D) Paying dividends first
Answer: A
10. Goodwill created in LBO purchase accounting is recognized when:
A) Purchase price > fair value of net assets
B) Debt > equity
C) Cash flow is negative
2026 2027 GRADED A+
LBO Modeling Exam from Wall Street Prep(NEW UPDATED VERSION) LATEST ACTUAL
EXAM QUESTIONS AND CORRECT ANSWERS (VERIFIED QUESTIONS AND ANSWERS) |
GUARANTEED PASS A+ UPDATED 2026
1. What is the primary purpose of an LBO model?
A) To value a company using DCF
B) To assess the feasibility of a leveraged acquisition
C) To analyze marketing impacts
D) To calculate tax liabilities
Answer: B
2. In an LBO, the “Sources & Uses” table shows:
A) Cash flows over time
B) Debt and equity funding sources and how they are deployed
C) Operating costs only
D) Projected revenues
Answer: B
2026 2027 GRADED A+
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3. Equity value in an LBO is calculated as:
A) Enterprise value – net debt
B) Enterprise value + net debt
C) Free cash flow × multiple
D) Only shareholder equity reported
Answer: A
4. A rollover equity percentage in an LBO represents:
A) Management’s retained ownership post-transaction
B) Debt obligations
C) Preferred securities
D) Future cash receipts
Answer: A
5. The target company’s enterprise value is typically based on:
A) Book value only
B) EBITDA × entry multiple
C) Revenue × current ratio
D) Net income × P/E ratio
Answer: B
6. MOIC stands for:
A) Multiple of Invested Capital
B) Market of Internal Comparison
C) Margin Over Investment Cost
D) Multiple on Interest Cover
Answer: A
7. IRR is best described as:
A) Debt to equity ratio
B) Internal Rate of Return
C) Interest rate revision
D) Initial revenue return
Answer: B
8. A higher exit multiple generally results in:
A) Lower IRR
B. Higher IRR
C. No impact on returns
D. Lower MOIC
Answer: B
9. Debt sweep means:
A) Using all excess cash flows to pay down debt
B) Selling company assets immediately
C) Reinvesting operating income
D) Paying dividends first
Answer: A
10. Goodwill created in LBO purchase accounting is recognized when:
A) Purchase price > fair value of net assets
B) Debt > equity
C) Cash flow is negative
2026 2027 GRADED A+
