BUSINESS FINANCE DCF FINAL EXAM - (90 QUESTIONS) UP-TO-DATE ACTUAL EXAM
QUESTIONS AND 100% ACCURATE SOLUTIONS | VERIFIED ANSWERS - INSTANT PDF
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Examiner/Administrator: Global Finance Academic Consortium (GFAC)
Candidate Name: ____________________________________________
Candidate ID: ________________________________________________
Date: ________________________________________________________
Examination Centre: __________________________________________
Time Allowed: 3 Hours
Total Questions: 90
Instructions: Attempt all questions. Use a financial calculator where necessary. All answers
must be justified.
Candidate Instructions:
• This examination assesses advanced understanding of discounted cash flow (DCF)
,valuation techniques applied in business finance contexts.
• You are required to demonstrate analytical reasoning, financial modeling skills, and the
ability to interpret valuation assumptions under real-world scenarios.
• Read each question carefully before selecting the most appropriate answer.
• Show all workings where applicable; however, select only one correct option per
question.
• The exam consists of approximately 90 questions to be completed within 3 hours.
Disclaimer:
This examination is an original simulation designed for educational purposes. It is inspired
by commonly tested concepts in business finance and valuation but does not replicate any
official or proprietary examination.
Core Domains Covered:
• Discounted Cash Flow (DCF) Valuation
• Free Cash Flow Forecasting
• Weighted Average Cost of Capital (WACC)
• Terminal Value Estimation
• Capital Structure and Risk Assessment
,• Sensitivity and Scenario Analysis
• Corporate Valuation Techniques
This examination evaluates your ability to apply valuation methodologies, interpret
financial data, and make informed financial decisions under uncertainty. Mastery of
these concepts is essential for roles in investment banking, corporate finance, and equity
research.
QUESTIONS
Q1. A firm projects free cash flow to the firm (FCFF) of $10M next year, growing at 5%
perpetually. If WACC is 10%, what is the firm value?
A. $150M
B. $200M
C. $210M
D. $250M
Correct Answer: 🔴 B. $200M
Explanation: 🟡 Using Gordon Growth Model: Value = FCFF₁ / (WACC - g) = 10 / (0.10 -
, 0.05) = 200. A is incorrect due to miscalculation, C and D overestimate value.
Q2. A company increases leverage significantly. What is the most likely immediate effect
on WACC (ignoring distress costs)?
A. WACC increases
B. WACC decreases
C. WACC remains unchanged
D. WACC becomes zero
Correct Answer: 🔴 B. WACC decreases
Explanation: 🟡 Debt is cheaper than equity due to tax shields, lowering WACC initially. A
ignores tax benefits, C is unrealistic, D is impossible.
Q3. In a DCF model, terminal value contributes 70% of total value. What is the biggest
risk?
A. Overestimating near-term growth
B. Misestimating discount rate
C. Over-reliance on terminal assumptions
D. Underestimating CAPEX
QUESTIONS AND 100% ACCURATE SOLUTIONS | VERIFIED ANSWERS - INSTANT PDF
DOWNLOAD
Examiner/Administrator: Global Finance Academic Consortium (GFAC)
Candidate Name: ____________________________________________
Candidate ID: ________________________________________________
Date: ________________________________________________________
Examination Centre: __________________________________________
Time Allowed: 3 Hours
Total Questions: 90
Instructions: Attempt all questions. Use a financial calculator where necessary. All answers
must be justified.
Candidate Instructions:
• This examination assesses advanced understanding of discounted cash flow (DCF)
,valuation techniques applied in business finance contexts.
• You are required to demonstrate analytical reasoning, financial modeling skills, and the
ability to interpret valuation assumptions under real-world scenarios.
• Read each question carefully before selecting the most appropriate answer.
• Show all workings where applicable; however, select only one correct option per
question.
• The exam consists of approximately 90 questions to be completed within 3 hours.
Disclaimer:
This examination is an original simulation designed for educational purposes. It is inspired
by commonly tested concepts in business finance and valuation but does not replicate any
official or proprietary examination.
Core Domains Covered:
• Discounted Cash Flow (DCF) Valuation
• Free Cash Flow Forecasting
• Weighted Average Cost of Capital (WACC)
• Terminal Value Estimation
• Capital Structure and Risk Assessment
,• Sensitivity and Scenario Analysis
• Corporate Valuation Techniques
This examination evaluates your ability to apply valuation methodologies, interpret
financial data, and make informed financial decisions under uncertainty. Mastery of
these concepts is essential for roles in investment banking, corporate finance, and equity
research.
QUESTIONS
Q1. A firm projects free cash flow to the firm (FCFF) of $10M next year, growing at 5%
perpetually. If WACC is 10%, what is the firm value?
A. $150M
B. $200M
C. $210M
D. $250M
Correct Answer: 🔴 B. $200M
Explanation: 🟡 Using Gordon Growth Model: Value = FCFF₁ / (WACC - g) = 10 / (0.10 -
, 0.05) = 200. A is incorrect due to miscalculation, C and D overestimate value.
Q2. A company increases leverage significantly. What is the most likely immediate effect
on WACC (ignoring distress costs)?
A. WACC increases
B. WACC decreases
C. WACC remains unchanged
D. WACC becomes zero
Correct Answer: 🔴 B. WACC decreases
Explanation: 🟡 Debt is cheaper than equity due to tax shields, lowering WACC initially. A
ignores tax benefits, C is unrealistic, D is impossible.
Q3. In a DCF model, terminal value contributes 70% of total value. What is the biggest
risk?
A. Overestimating near-term growth
B. Misestimating discount rate
C. Over-reliance on terminal assumptions
D. Underestimating CAPEX
