400 IB_ Discounted Cash Flow Questions & Answers – Basic
400 IB_
–Discounted
Practice Questions
Cash Flowand
Questions
Answers.pdf
& Answers – Basic
400 IB_
–Discounted
Practice Questions
Cash Flowand
Questions
Answers.pdf
& Answers – Basic – Practice Questions and Answers.pdf
1. 400 IB: Discounted
Cash Flow Questions
& Answers – Basic –
Practice Questions
and Answers
Guidehttps://www.stuvia.com/dashboard!@_)#*)(@$)($@*($@)($@*_
400 IB_ Discounted Cash Flow Questions & Answers – Basic
400 IB_
–Discounted
Practice Questions
Cash Flowand
Questions
Answers.pdf
& Answers – Basic
400 IB_
–Discounted
Practice Questions
Cash Flowand
Questions
Answers.pdf
& Answers – Basic – Practice Questions and Answers.pdf
, 400 IB_ Discounted Cash Flow Questions & Answers - Basic.pdf 400 IB_ Discounted Cash Flow Questions & Answers - Basic.pdf 400 IB_ Discounted Cash Flow Questions & Answers - Basic.pdf
Terms in this set (32)
1. Walk me through a DCF. "A DCF values a company based on the Present Value of its Cash Flows and the
Present Value of its Terminal Value.
First, you project out a company's financials using assumptions for revenue
growth, expenses and Working Capital; then you get down to Free Cash Flow for
each year, which you then sum up and discount to a Net Present Value, based on
your discount rate - usually the Weighted Average Cost of Capital.
Once you have the present value of the Cash Flows, you determine the company's
Terminal Value, using either the Multiples Method or the Gordon Growth Method,
and then also discount that back to its Net Present Value using WACC.
Finally, you add the two together to determine the company's Enterprise Value."
Walk me through how you get from Revenue to Free Subtract COGS and Operating Expenses to get to Operating Income (EBIT). Then,
Cash Flow in the projections. multiply by (1 - Tax Rate), add back Depreciation and other non-cash charges, and
subtract Capital Expenditures and the change in Working Capital.
Note: This gets you to Unlevered Free Cash Flow since you went off EBIT rather
than EBT. You might want to confirm that this is what the interviewer is asking for.
400 IB_ Discounted Cash Flow Questions & Answers - Basic.pdf 400 IB_ Discounted Cash Flow Questions & Answers - Basic.pdf 400 IB_ Discounted Cash Flow Questions & Answers - Basic.pdf
400 IB_
–Discounted
Practice Questions
Cash Flowand
Questions
Answers.pdf
& Answers – Basic
400 IB_
–Discounted
Practice Questions
Cash Flowand
Questions
Answers.pdf
& Answers – Basic – Practice Questions and Answers.pdf
1. 400 IB: Discounted
Cash Flow Questions
& Answers – Basic –
Practice Questions
and Answers
Guidehttps://www.stuvia.com/dashboard!@_)#*)(@$)($@*($@)($@*_
400 IB_ Discounted Cash Flow Questions & Answers – Basic
400 IB_
–Discounted
Practice Questions
Cash Flowand
Questions
Answers.pdf
& Answers – Basic
400 IB_
–Discounted
Practice Questions
Cash Flowand
Questions
Answers.pdf
& Answers – Basic – Practice Questions and Answers.pdf
, 400 IB_ Discounted Cash Flow Questions & Answers - Basic.pdf 400 IB_ Discounted Cash Flow Questions & Answers - Basic.pdf 400 IB_ Discounted Cash Flow Questions & Answers - Basic.pdf
Terms in this set (32)
1. Walk me through a DCF. "A DCF values a company based on the Present Value of its Cash Flows and the
Present Value of its Terminal Value.
First, you project out a company's financials using assumptions for revenue
growth, expenses and Working Capital; then you get down to Free Cash Flow for
each year, which you then sum up and discount to a Net Present Value, based on
your discount rate - usually the Weighted Average Cost of Capital.
Once you have the present value of the Cash Flows, you determine the company's
Terminal Value, using either the Multiples Method or the Gordon Growth Method,
and then also discount that back to its Net Present Value using WACC.
Finally, you add the two together to determine the company's Enterprise Value."
Walk me through how you get from Revenue to Free Subtract COGS and Operating Expenses to get to Operating Income (EBIT). Then,
Cash Flow in the projections. multiply by (1 - Tax Rate), add back Depreciation and other non-cash charges, and
subtract Capital Expenditures and the change in Working Capital.
Note: This gets you to Unlevered Free Cash Flow since you went off EBIT rather
than EBT. You might want to confirm that this is what the interviewer is asking for.
400 IB_ Discounted Cash Flow Questions & Answers - Basic.pdf 400 IB_ Discounted Cash Flow Questions & Answers - Basic.pdf 400 IB_ Discounted Cash Flow Questions & Answers - Basic.pdf
