MBA CORPORATE FINANCE DCF EXAM - (60 QUESTIONS) UP-TO-DATE ACTUAL EXAM
QUESTIONS AND 100% ACCURATE SOLUTIONS | VERIFIED ANSWERS - INSTANT PDF
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Examiner/Administrator: Graduate Business School Examination Board
Candidate Name: ____________________________
Candidate ID: ________________________________
Date: ______________________________________
Examination Centre: _________________________
Time Allowed: 120 Minutes
Total Questions: 60 (Answer all questions)
Core Competency Areas:
Discounted Cash Flow (DCF) Valuation
Weighted Average Cost of Capital (WACC)
Free Cash Flow to Firm (FCFF) & Equity (FCFE)
, Terminal Value Estimation
Capital Budgeting & Investment Decisions
Risk, Growth, and Sensitivity Analysis
_ Candidate Instructions: _
_ Answer all questions. Each question carries equal marks. Calculators are permitted.
Clearly select the most appropriate answer from the options provided. Ensure all
workings are logically derived, as questions are designed to assess analytical reasoning
and applied financial decision-making. The total number of questions in this
examination is 60. Manage your time effectively to complete all questions within the
allocated duration. _
_ This assessment evaluates advanced corporate finance skills with emphasis on
valuation using discounted cash flow methodologies. Candidates are expected to
demonstrate mastery in estimating cash flows, determining appropriate discount rates,
and interpreting valuation outputs in complex business scenarios. The exam integrates
real-world financial decision-making contexts commonly encountered in MBA-level
corporate finance programs. _
,Disclaimer: This is an original simulation designed to reflect the structure and rigor of an
MBA Corporate Finance examination. It is intended solely for educational and practice
purposes.
Q1. A firm expects FCFF of $50 million next year, growing at 4% perpetually. If WACC is
10%, what is the firm value? hard and difficult level
A. $750 million
B. $833.33 million
C. $900 million
D. $1,000 million
Correct Answer: 🔴 B. $833.33 million
Explanation: 🟡 Using Gordon Growth Model: Value = FCFF₁ / (WACC − g) = 50 / (0.10 −
0.04) = .06 = 833.33. A, C, and D result from incorrect discount spreads or arithmetic
errors.
Q2. A company’s FCFE is negative due to heavy reinvestment. Which valuation method is
most appropriate? hard and difficult level
A. Dividend Discount Model
B. FCFE Model
, C. FCFF Model
D. Residual Income Model
Correct Answer: 🔴 C. FCFF Model
Explanation: 🟡 FCFF is preferred when FCFE is unstable or negative. DDM fails without
dividends, FCFE unreliable, residual income requires accounting adjustments.
Q3. Increasing leverage typically affects WACC by: hard and difficult level
A. Always increasing it
B. Always decreasing it
C. Decreasing initially, then increasing
D. No effect
Correct Answer: 🔴 C. Decreasing initially, then increasing
Explanation: 🟡 Due to tax shield benefits, WACC declines first but rises with financial
distress risk. A and B are oversimplifications; D is incorrect.
Q4. Terminal value using exit multiple is most sensitive to: hard and difficult level
A. Tax rate
B. Selected multiple
C. Working capital
QUESTIONS AND 100% ACCURATE SOLUTIONS | VERIFIED ANSWERS - INSTANT PDF
DOWNLOAD
Examiner/Administrator: Graduate Business School Examination Board
Candidate Name: ____________________________
Candidate ID: ________________________________
Date: ______________________________________
Examination Centre: _________________________
Time Allowed: 120 Minutes
Total Questions: 60 (Answer all questions)
Core Competency Areas:
Discounted Cash Flow (DCF) Valuation
Weighted Average Cost of Capital (WACC)
Free Cash Flow to Firm (FCFF) & Equity (FCFE)
, Terminal Value Estimation
Capital Budgeting & Investment Decisions
Risk, Growth, and Sensitivity Analysis
_ Candidate Instructions: _
_ Answer all questions. Each question carries equal marks. Calculators are permitted.
Clearly select the most appropriate answer from the options provided. Ensure all
workings are logically derived, as questions are designed to assess analytical reasoning
and applied financial decision-making. The total number of questions in this
examination is 60. Manage your time effectively to complete all questions within the
allocated duration. _
_ This assessment evaluates advanced corporate finance skills with emphasis on
valuation using discounted cash flow methodologies. Candidates are expected to
demonstrate mastery in estimating cash flows, determining appropriate discount rates,
and interpreting valuation outputs in complex business scenarios. The exam integrates
real-world financial decision-making contexts commonly encountered in MBA-level
corporate finance programs. _
,Disclaimer: This is an original simulation designed to reflect the structure and rigor of an
MBA Corporate Finance examination. It is intended solely for educational and practice
purposes.
Q1. A firm expects FCFF of $50 million next year, growing at 4% perpetually. If WACC is
10%, what is the firm value? hard and difficult level
A. $750 million
B. $833.33 million
C. $900 million
D. $1,000 million
Correct Answer: 🔴 B. $833.33 million
Explanation: 🟡 Using Gordon Growth Model: Value = FCFF₁ / (WACC − g) = 50 / (0.10 −
0.04) = .06 = 833.33. A, C, and D result from incorrect discount spreads or arithmetic
errors.
Q2. A company’s FCFE is negative due to heavy reinvestment. Which valuation method is
most appropriate? hard and difficult level
A. Dividend Discount Model
B. FCFE Model
, C. FCFF Model
D. Residual Income Model
Correct Answer: 🔴 C. FCFF Model
Explanation: 🟡 FCFF is preferred when FCFE is unstable or negative. DDM fails without
dividends, FCFE unreliable, residual income requires accounting adjustments.
Q3. Increasing leverage typically affects WACC by: hard and difficult level
A. Always increasing it
B. Always decreasing it
C. Decreasing initially, then increasing
D. No effect
Correct Answer: 🔴 C. Decreasing initially, then increasing
Explanation: 🟡 Due to tax shield benefits, WACC declines first but rises with financial
distress risk. A and B are oversimplifications; D is incorrect.
Q4. Terminal value using exit multiple is most sensitive to: hard and difficult level
A. Tax rate
B. Selected multiple
C. Working capital
