DCF Valuation Modeling Study Questions and Correct Answers
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Discounted Cash Flow
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Discounted Cash Flow
What are two benefits of making a compacted DCF model 1. Helps us learn the main features of a DCF model 2. Helps in a situation where we need a quick analysis
What are two important dates in a DCF 1. Timing of the cashflows 2. Date of Valuation
The time value of money is also called the _______ ...
dcf valuation modeling study questions and correct
what are two benefits of making a compacted dcf mo
what are two important dates in a dcf 1 timing o
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DCF Valuation Modeling Study
Questions and Correct Answers
What are two benefits of making a compacted DCF model ✅1. Helps us learn the main
features of a DCF model
2. Helps in a situation where we need a quick analysis
What are two important dates in a DCF ✅1. Timing of the cashflows
2. Date of Valuation
The time value of money is also called the _______ ✅The time quantity of money
What is the simplified formula to discount the cashflows ✅Unlevered Free Cash Flow
(UFCF)/ Weighted Average Cost of Capital (WACC)
What are the three types of valuation techniques? ✅Discounted Cashflow Analysis
Comparable Trading Analysis
President Transaction analysis
Define Unlevered Free Cashflow ✅Cash flow available to all capital providers
Define Weighted Average Cost of Capital ✅The cost of capital from all capital
providers
What is the Enterprise Value in a DCF using Free Cashflows ✅Enterprise value = PV
of UFCF/WACC
How long into the future should we forecast in a DCF? ✅In perpetuity (This is a
common interview question)
What are the two parts of a DCF? ✅1. Discrete Forecast
2. Terminal Value
What is a terminal value of a firm? ✅
When is the start and end of the discrete forecast? ✅It starts when the company is
growing faster than the overall economy and ends when the company grows at the
same rate of the economy
, When is the start and end of a Terminal Value forecast? ✅The Terminal value forecast
starts when the company experiences the same amount of growth as the overall
economy and then continues forever (Using a growing perpetuity formula)
Perpetuity Growth formula ✅PV1=CF2/(R-G)
PV=Present Value of cashflow
CF=Cashflow of the next year
R= Required Return
G=Growth Rate
What does Enterprise Value represent? ✅Our view of the companies value
Equity Value formula ✅Equity Value = Enterprise Value - Net Debt
What is Net Debt formula? ✅Total Debt - Cash = Net Debt
What if the formula for Equity Value per Share? ✅Equity Value/Shares Outstanding =
Equity Value per Share
What is the keyboard shortcut for Zooming in and out? ✅Ctrl Alt +
or
Ctrl Alt -
What is the excel shortcut to group tabs? ✅Ctrl Shift Pg up/dn
What how do you make the discrete forecast excel formula? ✅=EDATE(today, # of
months in future)
For a sensitivity analysis what is the excel shortcut ✅Alt A W T
For row input you put terminal value growth rate
For Column input cell you put WACC
Before you make data tables you must check excel for what? ✅File->Options-
>Formulas
Under workbook calculations make sure its set to "Automatic" not "Manuel" or "Except
for data tables."
What is an inportant thing to remember when making data tables ✅Make sure that the
X and Y axis is stated as a value and not linked to any other cells
Make sure the Terminal Growth rate is on the middle on the X axis
Make sure that the WACC is in the middle on the y-axis
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