DCF MODEL EXAM - (30 QUESTIONS) UP-TO-DATE ACTUAL EXAM QUESTIONS AND
100% ACCURATE SOLUTIONS | VERIFIED ANSWERS - INSTANT PDF DOWNLOAD
CANDIDATE DETAILS
Candidate Name: _______________________________
Candidate ID: _________________________________
Date: ________________________________________
Examination Centre: ___________________________
INSTRUCTIONS TO CANDIDATES
This examination assesses your ability to construct, interpret, and evaluate Discounted
Cash Flow (DCF) models used in financial analysis and valuation. You are expected to
demonstrate applied knowledge of forecasting, cost of capital estimation, terminal value
calculations, and sensitivity analysis within realistic financial scenarios.
Time Allocation: 120 Minutes
Total Questions: 30
Answer all questions.
Use financial logic and structured reasoning where applicable.
, Calculators are permitted.
Select the most appropriate answer for each question.
DISCLAIMER
This is an original simulated examination designed for educational purposes. It is inspired
by common industry practices in financial modeling and valuation but does not replicate
any proprietary or official certification exam.
CORE COMPETENCY AREAS
Financial Statement Forecasting
Free Cash Flow Calculation
Weighted Average Cost of Capital (WACC)
Terminal Value Estimation
Sensitivity & Scenario Analysis
Valuation Interpretation
INTRODUCTION
,This assessment evaluates advanced competency in building and analyzing Discounted
Cash Flow (DCF) models, a cornerstone methodology in corporate finance, investment
banking, and equity research. Candidates must demonstrate the ability to translate
financial data into valuation outputs, critically assess assumptions, and interpret results
in a professional context. The exam reflects real-world analytical expectations and
emphasizes both conceptual understanding and applied modeling precision.
Q1. A company reports EBIT of $200 million, tax rate of 25%, depreciation of $40 million,
capital expenditures of $60 million, and an increase in working capital of $20 million. What
is the unlevered free cash flow (UFCF)?
A. $130 million
B. $150 million
C. $120 million
D. $110 million
Correct Answer: 🔴 B. $150 million
Explanation: 🟡
UFCF = EBIT × (1 – tax rate) + Depreciation – CapEx – Change in NWC
= 200 × 0.75 + 40 – 60 – 20 = 150 + 40 – 80 = 150
A is incorrect due to miscalculation of tax effect. C and D underestimate due to incorrect
deductions.
, Q2. In a DCF model, which component is most sensitive to small changes in assumptions?
A. Historical revenue
B. Terminal value
C. Depreciation
D. Tax rate
Correct Answer: 🔴 B. Terminal value
Explanation: 🟡
Terminal value often represents 60–80% of total valuation. Small changes in growth rate or
WACC significantly impact valuation. Other options have smaller relative impact.
Q3. A firm's WACC increases. What happens to its DCF valuation?
A. Increases
B. Decreases
C. No change
D. Becomes negative
Correct Answer: 🔴 B. Decreases
Explanation: 🟡
100% ACCURATE SOLUTIONS | VERIFIED ANSWERS - INSTANT PDF DOWNLOAD
CANDIDATE DETAILS
Candidate Name: _______________________________
Candidate ID: _________________________________
Date: ________________________________________
Examination Centre: ___________________________
INSTRUCTIONS TO CANDIDATES
This examination assesses your ability to construct, interpret, and evaluate Discounted
Cash Flow (DCF) models used in financial analysis and valuation. You are expected to
demonstrate applied knowledge of forecasting, cost of capital estimation, terminal value
calculations, and sensitivity analysis within realistic financial scenarios.
Time Allocation: 120 Minutes
Total Questions: 30
Answer all questions.
Use financial logic and structured reasoning where applicable.
, Calculators are permitted.
Select the most appropriate answer for each question.
DISCLAIMER
This is an original simulated examination designed for educational purposes. It is inspired
by common industry practices in financial modeling and valuation but does not replicate
any proprietary or official certification exam.
CORE COMPETENCY AREAS
Financial Statement Forecasting
Free Cash Flow Calculation
Weighted Average Cost of Capital (WACC)
Terminal Value Estimation
Sensitivity & Scenario Analysis
Valuation Interpretation
INTRODUCTION
,This assessment evaluates advanced competency in building and analyzing Discounted
Cash Flow (DCF) models, a cornerstone methodology in corporate finance, investment
banking, and equity research. Candidates must demonstrate the ability to translate
financial data into valuation outputs, critically assess assumptions, and interpret results
in a professional context. The exam reflects real-world analytical expectations and
emphasizes both conceptual understanding and applied modeling precision.
Q1. A company reports EBIT of $200 million, tax rate of 25%, depreciation of $40 million,
capital expenditures of $60 million, and an increase in working capital of $20 million. What
is the unlevered free cash flow (UFCF)?
A. $130 million
B. $150 million
C. $120 million
D. $110 million
Correct Answer: 🔴 B. $150 million
Explanation: 🟡
UFCF = EBIT × (1 – tax rate) + Depreciation – CapEx – Change in NWC
= 200 × 0.75 + 40 – 60 – 20 = 150 + 40 – 80 = 150
A is incorrect due to miscalculation of tax effect. C and D underestimate due to incorrect
deductions.
, Q2. In a DCF model, which component is most sensitive to small changes in assumptions?
A. Historical revenue
B. Terminal value
C. Depreciation
D. Tax rate
Correct Answer: 🔴 B. Terminal value
Explanation: 🟡
Terminal value often represents 60–80% of total valuation. Small changes in growth rate or
WACC significantly impact valuation. Other options have smaller relative impact.
Q3. A firm's WACC increases. What happens to its DCF valuation?
A. Increases
B. Decreases
C. No change
D. Becomes negative
Correct Answer: 🔴 B. Decreases
Explanation: 🟡
