DCF practice
DCF Interview Questions: Free Graded Practice
A DCF question is where interviewers find out if you understand the mechanics or only memorised the steps. Write your answer below and the grader tells you what an interviewer would have marked down.
- Whether free cash flow is built from the right starting line
- Whether the discount rate matches the cash flows
- Whether terminal value is handled and sanity checked
Free cash flow, WACC, terminal value, sensitivities. One graded rep, free, no account needed.
A company has revenue of 1,000, an operating margin of 18 percent, depreciation and amortization of 60, capital expenditure of 85, an increase in working capital of 25, and a 25 percent tax rate. Calculate unlevered free cash flow, showing each step, and state what would change if interest expense of 30 had been included.
Unlevered free cash flow is calculated before any financing effects and taxes operating profit directly.
Could you answer this in an interview today?