DCF Valuation Modeling UPDATED Actual
Exam Questions and CORRECT Answers
What are two benefits of making a compacted DCF model - CORRECT ANSWER✔✔- 1.
Helps us learn the main features of a DCF model
2. Helps in a situation where we need a quick analysis
What are two important dates in a DCF - CORRECT ANSWER✔✔- 1. Timing of the
cashflows
2. Date of Valuation
The time value of money is also called the _______ - CORRECT ANSWER✔✔- The time
quantity of money
What is the simplified formula to discount the cashflows - CORRECT ANSWER✔✔-
Unlevered Free Cash Flow (UFCF)/ Weighted Average Cost of Capital (WACC)
What are the three types of valuation techniques? - CORRECT ANSWER✔✔- Discounted
Cashflow Analysis
Comparable Trading Analysis
President Transaction analysis
Define Unlevered Free Cashflow - CORRECT ANSWER✔✔- Cash flow available to all
capital providers
Define Weighted Average Cost of Capital - CORRECT ANSWER✔✔- The cost of capital
from all capital providers
What is the Enterprise Value in a DCF using Free Cashflows - CORRECT ANSWER✔✔-
Enterprise value = PV of UFCF/WACC
How long into the future should we forecast in a DCF? - CORRECT ANSWER✔✔- In
perpetuity (This is a common interview question)
, What are the two parts of a DCF? - CORRECT ANSWER✔✔- 1. Discrete Forecast
2. Terminal Value
What is a terminal value of a firm? - CORRECT ANSWER✔✔-
When is the start and end of the discrete forecast? - CORRECT ANSWER✔✔- It starts when
the company is growing faster than the overall economy and ends when the company grows
at the same rate of the economy
When is the start and end of a Terminal Value forecast? - CORRECT ANSWER✔✔- The
Terminal value forecast starts when the company experiences the same amount of growth as
the overall economy and then continues forever (Using a growing perpetuity formula)
Perpetuity Growth formula - CORRECT ANSWER✔✔- PV1=CF2/(R-G)
PV=Present Value of cashflow
CF=Cashflow of the next year
R= Required Return
G=Growth Rate
What does Enterprise Value represent? - CORRECT ANSWER✔✔- Our view of the
companies value
Equity Value formula - CORRECT ANSWER✔✔- Equity Value = Enterprise Value - Net
Debt
What is Net Debt formula? - CORRECT ANSWER✔✔- Total Debt - Cash = Net Debt
What if the formula for Equity Value per Share? - CORRECT ANSWER✔✔- Equity
Value/Shares Outstanding = Equity Value per Share
Exam Questions and CORRECT Answers
What are two benefits of making a compacted DCF model - CORRECT ANSWER✔✔- 1.
Helps us learn the main features of a DCF model
2. Helps in a situation where we need a quick analysis
What are two important dates in a DCF - CORRECT ANSWER✔✔- 1. Timing of the
cashflows
2. Date of Valuation
The time value of money is also called the _______ - CORRECT ANSWER✔✔- The time
quantity of money
What is the simplified formula to discount the cashflows - CORRECT ANSWER✔✔-
Unlevered Free Cash Flow (UFCF)/ Weighted Average Cost of Capital (WACC)
What are the three types of valuation techniques? - CORRECT ANSWER✔✔- Discounted
Cashflow Analysis
Comparable Trading Analysis
President Transaction analysis
Define Unlevered Free Cashflow - CORRECT ANSWER✔✔- Cash flow available to all
capital providers
Define Weighted Average Cost of Capital - CORRECT ANSWER✔✔- The cost of capital
from all capital providers
What is the Enterprise Value in a DCF using Free Cashflows - CORRECT ANSWER✔✔-
Enterprise value = PV of UFCF/WACC
How long into the future should we forecast in a DCF? - CORRECT ANSWER✔✔- In
perpetuity (This is a common interview question)
, What are the two parts of a DCF? - CORRECT ANSWER✔✔- 1. Discrete Forecast
2. Terminal Value
What is a terminal value of a firm? - CORRECT ANSWER✔✔-
When is the start and end of the discrete forecast? - CORRECT ANSWER✔✔- It starts when
the company is growing faster than the overall economy and ends when the company grows
at the same rate of the economy
When is the start and end of a Terminal Value forecast? - CORRECT ANSWER✔✔- The
Terminal value forecast starts when the company experiences the same amount of growth as
the overall economy and then continues forever (Using a growing perpetuity formula)
Perpetuity Growth formula - CORRECT ANSWER✔✔- PV1=CF2/(R-G)
PV=Present Value of cashflow
CF=Cashflow of the next year
R= Required Return
G=Growth Rate
What does Enterprise Value represent? - CORRECT ANSWER✔✔- Our view of the
companies value
Equity Value formula - CORRECT ANSWER✔✔- Equity Value = Enterprise Value - Net
Debt
What is Net Debt formula? - CORRECT ANSWER✔✔- Total Debt - Cash = Net Debt
What if the formula for Equity Value per Share? - CORRECT ANSWER✔✔- Equity
Value/Shares Outstanding = Equity Value per Share
