IB DCF TECHNICAL INTERVIEW EXAM - (30 QUESTIONS) UP-TO-DATE ACTUAL EXAM
QUESTIONS AND 100% ACCURATE SOLUTIONS | VERIFIED ANSWERS - INSTANT PDF
DOWNLOAD
Candidate Name: ____________________________
Candidate ID: _______________________________
Date: ______________________________________
Examination Centre: _________________________
Time Allowed: 90 Minutes
Total Questions: 30
Instructions to Candidates:
Answer all questions. Each question is multiple-choice with one correct answer.
Calculators are permitted. Show rough work where necessary. This assessment evaluates
advanced technical understanding of discounted cash flow (DCF) valuation as applied in
investment banking interviews. Candidates are expected to demonstrate both conceptual
mastery and applied analytical reasoning.
,Disclaimer:
This is an original simulation designed for educational and interview preparation purposes.
It is not affiliated with or derived from any proprietary or confidential examination.
Core Competency Areas:
Financial Modeling & Forecasting
Discounted Cash Flow (DCF) Analysis
Cost of Capital & WACC
Terminal Value Estimation
Sensitivity & Scenario Analysis
Valuation Interpretation & Judgment
This examination assesses a candidate’s ability to perform and interpret DCF valuations
in realistic investment banking scenarios. It emphasizes practical judgment, financial
logic, and modeling intuition under time constraints.
,Questions
Q1. A company has unlevered free cash flow projected at $50M growing at 5% annually
for 5 years. If WACC is 10%, what is the primary driver of valuation sensitivity? hard and
difficult level
A. Initial cash flow level
B. Growth rate assumption
C. Tax rate
D. Depreciation schedule
Correct Answer: 🔴 B. Growth rate assumption
Explanation: 🟡 Growth assumptions significantly affect compounded cash flows and
terminal value. Initial cash flow matters, but growth magnifies value over time. Tax and
depreciation impact are secondary in DCF sensitivity.
Q2. If WACC increases, what is the direct effect on enterprise value? hard and difficult level
A. Increases exponentially
B. Remains unchanged
C. Decreases
D. Becomes volatile
, Correct Answer: 🔴 C. Decreases
Explanation: 🟡 Higher WACC increases discounting, reducing present value of future cash
flows. Exponential increase is incorrect. Value does not remain unchanged.
Q3. Which method is most commonly used for terminal value in IB models? hard and
difficult level
A. Liquidation value
B. Replacement cost
C. Gordon Growth Model
D. Sum-of-parts
Correct Answer: 🔴 C. Gordon Growth Model
Explanation: 🟡 Gordon Growth is widely used due to simplicity and forward-looking
assumption. Others are less common in standard DCFs.
Q4. Why is unlevered free cash flow used in DCF? hard and difficult level
A. Ignores tax entirely
B. Excludes interest payments
C. Includes dividends
D. Focuses on equity only
QUESTIONS AND 100% ACCURATE SOLUTIONS | VERIFIED ANSWERS - INSTANT PDF
DOWNLOAD
Candidate Name: ____________________________
Candidate ID: _______________________________
Date: ______________________________________
Examination Centre: _________________________
Time Allowed: 90 Minutes
Total Questions: 30
Instructions to Candidates:
Answer all questions. Each question is multiple-choice with one correct answer.
Calculators are permitted. Show rough work where necessary. This assessment evaluates
advanced technical understanding of discounted cash flow (DCF) valuation as applied in
investment banking interviews. Candidates are expected to demonstrate both conceptual
mastery and applied analytical reasoning.
,Disclaimer:
This is an original simulation designed for educational and interview preparation purposes.
It is not affiliated with or derived from any proprietary or confidential examination.
Core Competency Areas:
Financial Modeling & Forecasting
Discounted Cash Flow (DCF) Analysis
Cost of Capital & WACC
Terminal Value Estimation
Sensitivity & Scenario Analysis
Valuation Interpretation & Judgment
This examination assesses a candidate’s ability to perform and interpret DCF valuations
in realistic investment banking scenarios. It emphasizes practical judgment, financial
logic, and modeling intuition under time constraints.
,Questions
Q1. A company has unlevered free cash flow projected at $50M growing at 5% annually
for 5 years. If WACC is 10%, what is the primary driver of valuation sensitivity? hard and
difficult level
A. Initial cash flow level
B. Growth rate assumption
C. Tax rate
D. Depreciation schedule
Correct Answer: 🔴 B. Growth rate assumption
Explanation: 🟡 Growth assumptions significantly affect compounded cash flows and
terminal value. Initial cash flow matters, but growth magnifies value over time. Tax and
depreciation impact are secondary in DCF sensitivity.
Q2. If WACC increases, what is the direct effect on enterprise value? hard and difficult level
A. Increases exponentially
B. Remains unchanged
C. Decreases
D. Becomes volatile
, Correct Answer: 🔴 C. Decreases
Explanation: 🟡 Higher WACC increases discounting, reducing present value of future cash
flows. Exponential increase is incorrect. Value does not remain unchanged.
Q3. Which method is most commonly used for terminal value in IB models? hard and
difficult level
A. Liquidation value
B. Replacement cost
C. Gordon Growth Model
D. Sum-of-parts
Correct Answer: 🔴 C. Gordon Growth Model
Explanation: 🟡 Gordon Growth is widely used due to simplicity and forward-looking
assumption. Others are less common in standard DCFs.
Q4. Why is unlevered free cash flow used in DCF? hard and difficult level
A. Ignores tax entirely
B. Excludes interest payments
C. Includes dividends
D. Focuses on equity only
