Corporate Finance - Company Valuation Exam Questions With Correct Answers.
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Course
Corporate Finance
Institution
Corporate Finance
Corporate Finance - Company Valuation
Exam Questions With Correct Answers.
What does almost every valuation method include? - answerDiscounted future Cash Flows or
Dividends
What is an assumption to make regarding cashflows - answerAssumption that shareholders
have already been rewarded from c...
Corporate Finance - Company Valuation
Exam Questions With Correct Answers.
What does almost every valuation method include? - answer✔✔Discounted future Cash Flows or
Dividends
What is an assumption to make regarding cashflows - answer✔✔Assumption that shareholders
have already been rewarded from cashflows generated in the past
What should be excluded for future cashflows? - answer✔✔Historical cashflows should be
excluded for future cashflows
What is the formula for value? - answer✔✔Value = PV of cashflows within the planning horizon
+ PV of cashflows after the planning horizon
What is the planning horizon normally set at? - answer✔✔5 - 10 years
How are cashflows discounted? - answer✔✔At the Weighted Average Cost of Capital (WACC)
What are cashflows after the planning horizon treated as? - answer✔✔A perpetuity
What does Operational Cashflow Valuation rely on? - answer✔✔Accurate Forecasting
Valuation is based on financial forecasts therefore it requires a set of financial assumptions, what
are some of the assumptions? - answer✔✔-Profit growth
-Depreciation and other non- cash items
-Investments in fixed assets
-Changes to WC
-Interests payments
-Future tax payments
What would go in the first column of a cashflow valuation table? - answer✔✔Year
Forecast Profit
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