DCF Valuation Modeling Exam Questions and Answers Update with complete solution

DCF Valuation Modeling Exam Questions and Answers Update with complete solution

What are two benefits of making a compacted DCF model -
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 - ANSWER >>>1.
Timing of the cashflows
2. Date of Valuation
The time value of money is also called the _______ -
ANSWER >>>The time quantity of money
What is the simplified formula to discount the cashflows -
ANSWER >>>Unlevered Free Cash Flow (UFCF)/ Weighted
Average Cost of Capital (WACC)

What are the three types of valuation techniques? -
ANSWER >>>Discounted Cashflow Analysis
Comparable Trading Analysis
President Transaction analysis
Define Unlevered Free Cashflow - ANSWER >>>Cash flow
available to all capital providers
Define Weighted Average Cost of Capital - ANSWER >>>The
cost of capital from all capital providers
What is the Enterprise Value in a DCF using Free Cashflows -
ANSWER >>>Enterprise value = PV of UFCF/WACC
How long into the future should we forecast in a DCF? -
ANSWER >>>In perpetuity (This is a common interview
question)
What are the two parts of a DCF? - ANSWER >>>1. Discrete
Forecast
2. Terminal Value
What is a terminal value of a firm? - ANSWER >>>
When is the start and end of the discrete forecast? -
ANSWER >>>It starts when the company is growing faster