DCF or discounted cash flow model exam answers from Wall street prep. Please note that the order of the questions are mixed for everyone but the questions and answers are the same!
8/15/23, 7:03 PM Completed Exam | Wall Street Prep
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Review: DCF Modeling Exam
Question 1
The next two questions use the data below. The data will be repeated on the next question:
You have been tasked with building a stand-alone DCF valuation for Milner Beverages, a publicly traded company, using the
unlevered two-stage approach. You calculate the following:
$ in millions 2017 2018 2019 2020 2021 2022 2023
Unlevered free cash flow 110.0 120.0 150.0 170.0 200.0 250.0 280.0
In addition, you calculate the following:
WACC = 8.00%
Perpetuity growth rate (annual growth rate of unlevered free cash flows after 2023) = 3.00%
Calculate enterprise value at the beginning of 2017 assuming all cash flows occur at year-end. Use whole numbers (i.e. 1 year
exactly equals 1 period when calculating returns and discounting).
$4,173.30
$4,271.40
$4,540.60
$6,505.80
$6,673.80
Question 2
This question uses the same data as the previous question, shown below.
You have been tasked with building a stand-alone DCF valuation for Milner Beverages, a publicly traded company, using the
unlevered two-stage approach. You calculate the following:
$ in millions 2017 2018 2019 2020 2021 2022 2023
Unlevered free cash flow 110.0 120.0 150.0 170.0 200.0 250.0 280.0
In addition, you calculate the following:
WACC = 8.00%
Perpetuity growth rate (annual growth rate of unlevered free cash flows after 2023) = 3.00%
Using the mid-year convention, calculate the enterprise value as of December 31, 2016. Assume all cash flows, including
perpetuity cash flows, occur midyear.
$4,110.10
$4,306.90
$4,438.90
$6,709.30
$6,717.90
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