FINANCE FINAL EXAM – DCF SECTION - (30 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: ____________________________
Instructions to Candidates:
This examination assesses advanced competency in discounted cash flow (DCF)
valuation, a core technique in corporate finance and investment analysis. Candidates are
expected to demonstrate proficiency in forecasting free cash flows, estimating discount
rates, and applying terminal value methodologies. The exam consists of 30 challenging
multiple-choice questions designed to simulate a rigorous final-level finance assessment.
You have 120 minutes to complete the examination. Answer all questions. Calculators are
permitted. Show all workings where necessary for clarity and internal validation._
,Core Competency Areas:
Free Cash Flow to Firm (FCFF) and Free Cash Flow to Equity (FCFE)
Weighted Average Cost of Capital (WACC)
Terminal Value Estimation
Sensitivity and Scenario Analysis
Capital Structure and Valuation Adjustments
Forecasting Assumptions and Growth Modeling
Introduction:
This Finance Final Exam – DCF Section is designed to evaluate a candidate’s mastery of
valuation methodologies used in real-world financial analysis. The exam integrates
applied scenarios involving corporate valuation, capital budgeting, and investment
decision-making. Candidates must demonstrate analytical rigor and the ability to
interpret financial data under varying assumptions. This simulation reflects the structure
and complexity of advanced finance examinations while maintaining originality and
academic integrity.
Disclaimer:
This is an original simulated examination created for educational purposes. It is not
,affiliated with or derived from any official examination body.
Q1. A firm projects FCFF of $120 million next year, growing at 4% perpetually. If WACC is
9%, what is the enterprise value?
A. $2,000 million
B. $2,400 million
C. $2,000 / (0.09–0.04) = $2,400 million
D. $2,400 / (0.09–0.04)
Correct Answer: 🔴 C. $2,000 / (0.09–0.04) = $2,400 million
Explanation: 🟡 Using Gordon Growth Model: Value = FCFF₁ / (WACC – g) = 120 / (0.09–
0.04) = .05 = 2,400. A is incorrect due to miscalculation. B states value but without
derivation. D is incorrect formula structure.
Q2. A company has FCFE of $50M and equity cost of 10%. Growth is 3%. What is equity
value?
A. $714M
B. $500M
C. $1,000M
D. $833M
, Correct Answer: 🔴 A. $714M
Explanation: 🟡 Value = 50 / (0.10–0.03) = .07 ≈ 714. B and C ignore growth. D uses
incorrect denominator.
Q3. Which adjustment is required to move from FCFF to FCFE?
A. Add interest expense
B. Subtract net borrowing
C. Add net borrowing
D. Subtract taxes
Correct Answer: 🔴 C. Add net borrowing
Explanation: 🟡 FCFE = FCFF – interest(1–t) + net borrowing. A is incorrect as interest must
be adjusted for tax. B reverses effect. D irrelevant.
Q4. A firm increases leverage. What is the likely effect on WACC initially?
A. Increase
B. Decrease
C. No change
D. Infinite
QUESTIONS AND 100% ACCURATE SOLUTIONS | VERIFIED ANSWERS - INSTANT PDF
DOWNLOAD
Candidate Name: ________________________________
Candidate ID: _________________________________
Date: ________________________________________
Examination Centre: ____________________________
Instructions to Candidates:
This examination assesses advanced competency in discounted cash flow (DCF)
valuation, a core technique in corporate finance and investment analysis. Candidates are
expected to demonstrate proficiency in forecasting free cash flows, estimating discount
rates, and applying terminal value methodologies. The exam consists of 30 challenging
multiple-choice questions designed to simulate a rigorous final-level finance assessment.
You have 120 minutes to complete the examination. Answer all questions. Calculators are
permitted. Show all workings where necessary for clarity and internal validation._
,Core Competency Areas:
Free Cash Flow to Firm (FCFF) and Free Cash Flow to Equity (FCFE)
Weighted Average Cost of Capital (WACC)
Terminal Value Estimation
Sensitivity and Scenario Analysis
Capital Structure and Valuation Adjustments
Forecasting Assumptions and Growth Modeling
Introduction:
This Finance Final Exam – DCF Section is designed to evaluate a candidate’s mastery of
valuation methodologies used in real-world financial analysis. The exam integrates
applied scenarios involving corporate valuation, capital budgeting, and investment
decision-making. Candidates must demonstrate analytical rigor and the ability to
interpret financial data under varying assumptions. This simulation reflects the structure
and complexity of advanced finance examinations while maintaining originality and
academic integrity.
Disclaimer:
This is an original simulated examination created for educational purposes. It is not
,affiliated with or derived from any official examination body.
Q1. A firm projects FCFF of $120 million next year, growing at 4% perpetually. If WACC is
9%, what is the enterprise value?
A. $2,000 million
B. $2,400 million
C. $2,000 / (0.09–0.04) = $2,400 million
D. $2,400 / (0.09–0.04)
Correct Answer: 🔴 C. $2,000 / (0.09–0.04) = $2,400 million
Explanation: 🟡 Using Gordon Growth Model: Value = FCFF₁ / (WACC – g) = 120 / (0.09–
0.04) = .05 = 2,400. A is incorrect due to miscalculation. B states value but without
derivation. D is incorrect formula structure.
Q2. A company has FCFE of $50M and equity cost of 10%. Growth is 3%. What is equity
value?
A. $714M
B. $500M
C. $1,000M
D. $833M
, Correct Answer: 🔴 A. $714M
Explanation: 🟡 Value = 50 / (0.10–0.03) = .07 ≈ 714. B and C ignore growth. D uses
incorrect denominator.
Q3. Which adjustment is required to move from FCFF to FCFE?
A. Add interest expense
B. Subtract net borrowing
C. Add net borrowing
D. Subtract taxes
Correct Answer: 🔴 C. Add net borrowing
Explanation: 🟡 FCFE = FCFF – interest(1–t) + net borrowing. A is incorrect as interest must
be adjusted for tax. B reverses effect. D irrelevant.
Q4. A firm increases leverage. What is the likely effect on WACC initially?
A. Increase
B. Decrease
C. No change
D. Infinite
