DCF Modeling Wall Street Prep Exam VERIFIED
WALL STREET PREP
Professional Financial Modeling Program
Discounted Cash Flow (DCF)
Modeling
Wall Street Prep Exam
VERIFIED
Exam Type Comprehensive DCF Assessment
Total Questions 50 Questions
Duration 100 Minutes
Format Multiple Choice, Scenario & Calculation
Passing Score 75% ( Questions)
Certificate Awarded upon successful completion
For personal study use only. Do not distribute.
VERIFIED EXAM MATERIAL | © Wall Street Prep | Page
,DCF Modeling Wall Street Prep Exam VERIFIED
EXAM INSTRUCTIONS
• This exam tests DCF valuation concepts covered in the Wall Street Prep curriculum.
• All 50 questions are multiple choice — select the single best answer.
• Calculation questions require scratch-paper work — show your reasoning.
• A financial calculator or spreadsheet software is permitted.
• All dollar figures are in millions ($ millions) unless stated otherwise.
• WACC and growth rates are given for each scenario.
• Passing score is 75% (38 correct out of 50).
Section Topic Qs
UFCF Calculation &
Section 1 Q1–Q10
Projections
WACC & Discount
Section 2 Q11–Q20
Rate
Section 3 Terminal Value Q21–Q30
Enterprise Value &
Section 4 Q31–Q40
Equity Bridge
Sensitivity Analysis &
Section 5 Q41–Q50
Advanced
SECTION 1 — Unlevered Free Cash Flow & Projections
Question 1: The next two questions use the data below. You have been tasked with building a
stand-alone DCF valuation for Miner Beverages, a publicly traded company, using the
unlevered two-stage approach. You calculate the following:
$ in millions 2017 2018 2019 2020 2021 2022 2023
Unlevered Free Cash
110.0 120.0 150.0 170.0 200.0 250.0 280.0
Flow
• WACC = 8.00%
• Perpetuity growth rate (annual growth rate of unlevered free cash flows after 2023) = 3.00%
VERIFIED EXAM MATERIAL | © Wall Street Prep | Page
, DCF Modeling Wall Street Prep Exam VERIFIED
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).
A. $4,173.30
B. $4,271.40
C. $4,540.60
D. $6,505.80
E. $6,673.80
Correct: B — Discount each UFCF at WACC=8% for periods 1–7 (2017–2023). PV of FCFs ≈
$884.6M. Terminal Value (end 2023) = $280 × 1.03 / (8%–3%) = $5,768M. PV of TV = $5,768 /
(1.08)^7 ≈ $3,386.8M. Enterprise Value = $884.6 + $3,386.8 = $4,271.4M.
Question 2: This question uses the same data as the previous question. You have been
tasked with building a stand-alone DCF valuation for Miner Beverages using the unlevered two-
stage approach (data repeated below):
$ in millions 2017 2018 2019 2020 2021 2022 2023
Unlevered Free Cash
110.0 120.0 150.0 170.0 200.0 250.0 280.0
Flow
• WACC = 8.00%
• Perpetuity growth rate (annual growth rate of unlevered free cash flows after 2023) = 3.00%
Using the mid-year convention, calculate the enterprise value as of December 31, 2016.
Assume all cash flows, including perpetuity cash flows, occur midyear.
A. $4,110.10
B. $4,306.90
C. $4,438.90
D. $6,709.30
E. $6,717.90
Correct: C — Mid-year convention: each FCF is discounted at period – 0.5 (e.g., 2017 CF
discounted at 0.5, 2018 at 1.5 … 2023 at 6.5). TV also uses mid-year timing. The mid-year
adjustment applies a factor of (1+WACC)^0.5 ≈ 1.0392 to the year-end EV of $4,271.4, giving ≈
$4,438.9M.
VERIFIED EXAM MATERIAL | © Wall Street Prep | Page
WALL STREET PREP
Professional Financial Modeling Program
Discounted Cash Flow (DCF)
Modeling
Wall Street Prep Exam
VERIFIED
Exam Type Comprehensive DCF Assessment
Total Questions 50 Questions
Duration 100 Minutes
Format Multiple Choice, Scenario & Calculation
Passing Score 75% ( Questions)
Certificate Awarded upon successful completion
For personal study use only. Do not distribute.
VERIFIED EXAM MATERIAL | © Wall Street Prep | Page
,DCF Modeling Wall Street Prep Exam VERIFIED
EXAM INSTRUCTIONS
• This exam tests DCF valuation concepts covered in the Wall Street Prep curriculum.
• All 50 questions are multiple choice — select the single best answer.
• Calculation questions require scratch-paper work — show your reasoning.
• A financial calculator or spreadsheet software is permitted.
• All dollar figures are in millions ($ millions) unless stated otherwise.
• WACC and growth rates are given for each scenario.
• Passing score is 75% (38 correct out of 50).
Section Topic Qs
UFCF Calculation &
Section 1 Q1–Q10
Projections
WACC & Discount
Section 2 Q11–Q20
Rate
Section 3 Terminal Value Q21–Q30
Enterprise Value &
Section 4 Q31–Q40
Equity Bridge
Sensitivity Analysis &
Section 5 Q41–Q50
Advanced
SECTION 1 — Unlevered Free Cash Flow & Projections
Question 1: The next two questions use the data below. You have been tasked with building a
stand-alone DCF valuation for Miner Beverages, a publicly traded company, using the
unlevered two-stage approach. You calculate the following:
$ in millions 2017 2018 2019 2020 2021 2022 2023
Unlevered Free Cash
110.0 120.0 150.0 170.0 200.0 250.0 280.0
Flow
• WACC = 8.00%
• Perpetuity growth rate (annual growth rate of unlevered free cash flows after 2023) = 3.00%
VERIFIED EXAM MATERIAL | © Wall Street Prep | Page
, DCF Modeling Wall Street Prep Exam VERIFIED
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).
A. $4,173.30
B. $4,271.40
C. $4,540.60
D. $6,505.80
E. $6,673.80
Correct: B — Discount each UFCF at WACC=8% for periods 1–7 (2017–2023). PV of FCFs ≈
$884.6M. Terminal Value (end 2023) = $280 × 1.03 / (8%–3%) = $5,768M. PV of TV = $5,768 /
(1.08)^7 ≈ $3,386.8M. Enterprise Value = $884.6 + $3,386.8 = $4,271.4M.
Question 2: This question uses the same data as the previous question. You have been
tasked with building a stand-alone DCF valuation for Miner Beverages using the unlevered two-
stage approach (data repeated below):
$ in millions 2017 2018 2019 2020 2021 2022 2023
Unlevered Free Cash
110.0 120.0 150.0 170.0 200.0 250.0 280.0
Flow
• WACC = 8.00%
• Perpetuity growth rate (annual growth rate of unlevered free cash flows after 2023) = 3.00%
Using the mid-year convention, calculate the enterprise value as of December 31, 2016.
Assume all cash flows, including perpetuity cash flows, occur midyear.
A. $4,110.10
B. $4,306.90
C. $4,438.90
D. $6,709.30
E. $6,717.90
Correct: C — Mid-year convention: each FCF is discounted at period – 0.5 (e.g., 2017 CF
discounted at 0.5, 2018 at 1.5 … 2023 at 6.5). TV also uses mid-year timing. The mid-year
adjustment applies a factor of (1+WACC)^0.5 ≈ 1.0392 to the year-end EV of $4,271.4, giving ≈
$4,438.9M.
VERIFIED EXAM MATERIAL | © Wall Street Prep | Page
