CORPORATE VALUATION DCF EXAM - (90 QUESTIONS) UP-TO-DATE ACTUAL EXAM
QUESTIONS AND 100% ACCURATE SOLUTIONS | VERIFIED ANSWERS - INSTANT PDF
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Candidate Name: ____________________________
Candidate ID: ________________________________
Date: _______________________________________
Examination Centre: __________________________
Time Allowed: 3 Hours
Total Questions: 90
Instructions: Answer all questions. Show all workings where applicable. Calculators
permitted.
This assessment evaluates a candidate’s ability to apply discounted cash flow (DCF)
methodologies in corporate valuation contexts. Candidates are expected to demonstrate
proficiency in forecasting free cash flows, estimating discount rates, determining
terminal value, and interpreting valuation outputs in strategic financial decision-
,making. The exam reflects advanced financial modeling and analytical reasoning skills
required in investment banking, equity research, and corporate finance roles.
Candidates must carefully read each question and select the most appropriate answer.
All questions are compulsory. Allocate your time efficiently (approximately 2 minutes per
question). Use of financial calculators is allowed. Assume all cash flows occur at period-
end unless otherwise stated. Round answers where necessary.
Core Competencies Assessed:
Free Cash Flow (FCFF & FCFE) Modeling
Weighted Average Cost of Capital (WACC)
Terminal Value Estimation (Gordon Growth & Exit Multiple)
Sensitivity & Scenario Analysis
Capital Structure & Cost of Capital Dynamics
Valuation Interpretation & Decision-Making
,This examination is an original simulation designed for educational purposes and is not
affiliated with any official certification body.
Q1. A firm projects FCFF of $120M next year, growing at 4% perpetually. If WACC is 10%,
what is the enterprise value today? hard and difficult level
A. $1,800M
B. $2,000M
C. $2,400M
D. $3,000M
Correct Answer: 🔴 B. $2,000M
Explanation: 🟡 Using Gordon Growth: EV = FCFF₁ / (WACC – g) = 120 / (0.10 – 0.04) = 120
/ 0.06 = 2,000M. A underestimates, C and D overestimate due to incorrect denominator or
growth handling.
Q2. A company’s WACC decreases after increasing debt in its capital structure. Which
assumption most likely explains this? hard and difficult level
A. Debt is more expensive than equity
B. Tax shield benefits outweigh financial distress costs
C. Equity becomes risk-free
, D. Debt has no impact on beta
Correct Answer: 🔴 B. Tax shield benefits outweigh financial distress costs
Explanation: 🟡 Increased leverage lowers WACC when tax benefits dominate. A is incorrect
since debt is usually cheaper. C is unrealistic. D ignores leverage impact on beta.
Q3. A firm has FCFE of $80M, cost of equity 12%, and growth rate 3%. What is equity
value? hard and difficult level
A. $533M
B. $667M
C. $800M
D. $1,000M
Correct Answer: 🔴 B. $667M
Explanation: 🟡 Equity Value = FCFE / (ke – g) = 80 / (0.12 – 0.03) = .09 ≈ 667M.
Others result from incorrect spreads.
Q4. Which adjustment is required when converting EBIT to FCFF? hard and difficult level
A. Add interest expense
B. Subtract taxes on EBIT
C. Add dividends
QUESTIONS AND 100% ACCURATE SOLUTIONS | VERIFIED ANSWERS - INSTANT PDF
DOWNLOAD
Candidate Name: ____________________________
Candidate ID: ________________________________
Date: _______________________________________
Examination Centre: __________________________
Time Allowed: 3 Hours
Total Questions: 90
Instructions: Answer all questions. Show all workings where applicable. Calculators
permitted.
This assessment evaluates a candidate’s ability to apply discounted cash flow (DCF)
methodologies in corporate valuation contexts. Candidates are expected to demonstrate
proficiency in forecasting free cash flows, estimating discount rates, determining
terminal value, and interpreting valuation outputs in strategic financial decision-
,making. The exam reflects advanced financial modeling and analytical reasoning skills
required in investment banking, equity research, and corporate finance roles.
Candidates must carefully read each question and select the most appropriate answer.
All questions are compulsory. Allocate your time efficiently (approximately 2 minutes per
question). Use of financial calculators is allowed. Assume all cash flows occur at period-
end unless otherwise stated. Round answers where necessary.
Core Competencies Assessed:
Free Cash Flow (FCFF & FCFE) Modeling
Weighted Average Cost of Capital (WACC)
Terminal Value Estimation (Gordon Growth & Exit Multiple)
Sensitivity & Scenario Analysis
Capital Structure & Cost of Capital Dynamics
Valuation Interpretation & Decision-Making
,This examination is an original simulation designed for educational purposes and is not
affiliated with any official certification body.
Q1. A firm projects FCFF of $120M next year, growing at 4% perpetually. If WACC is 10%,
what is the enterprise value today? hard and difficult level
A. $1,800M
B. $2,000M
C. $2,400M
D. $3,000M
Correct Answer: 🔴 B. $2,000M
Explanation: 🟡 Using Gordon Growth: EV = FCFF₁ / (WACC – g) = 120 / (0.10 – 0.04) = 120
/ 0.06 = 2,000M. A underestimates, C and D overestimate due to incorrect denominator or
growth handling.
Q2. A company’s WACC decreases after increasing debt in its capital structure. Which
assumption most likely explains this? hard and difficult level
A. Debt is more expensive than equity
B. Tax shield benefits outweigh financial distress costs
C. Equity becomes risk-free
, D. Debt has no impact on beta
Correct Answer: 🔴 B. Tax shield benefits outweigh financial distress costs
Explanation: 🟡 Increased leverage lowers WACC when tax benefits dominate. A is incorrect
since debt is usually cheaper. C is unrealistic. D ignores leverage impact on beta.
Q3. A firm has FCFE of $80M, cost of equity 12%, and growth rate 3%. What is equity
value? hard and difficult level
A. $533M
B. $667M
C. $800M
D. $1,000M
Correct Answer: 🔴 B. $667M
Explanation: 🟡 Equity Value = FCFE / (ke – g) = 80 / (0.12 – 0.03) = .09 ≈ 667M.
Others result from incorrect spreads.
Q4. Which adjustment is required when converting EBIT to FCFF? hard and difficult level
A. Add interest expense
B. Subtract taxes on EBIT
C. Add dividends
