<<12345678910111213141516171819202122232425262728293031323334353637383940>> 1. What is the foundational concept of the Discounted Cash Flow (DCF) approach?Future cash flows equal present valueFuture cash flows discounted at a fixed ratePresent value is independent of future cash flowsPresent value equals future cash flowsQuestion 1 of 40 2. What determines how the discount rate is calculated in the DCF method?Predicted future cash flowsProjected market trendsLevel of risk associated with cash flowsIndustry benchmark ratesQuestion 2 of 40 3. In DCF valuation, what factors are usually included in cash flow estimation?Operating income and taxes onlyOperating income, taxes, and CAPEXNet income and total liabilitiesCapital expenditures and market valueQuestion 3 of 40 4. How is the discount rate commonly referred to in DCF valuation?Expected rate of returnCost of capitalForecasted ratePredictive interest rateQuestion 4 of 40 5. When forecasting cash flows in DCF, for how many years are projections typically made?2-4 years5-10 years15-20 yearsVariable, depending on industryQuestion 5 of 40 6. What is the purpose of estimating a terminal value in DCF?To calculate present valueTo assess initial investmentTo represent future growth beyond projectionTo determine current market valueQuestion 6 of 40 7. How are projected cash flows discounted in the DCF method?Multiplying by the discount rateDividing by the discount rateDiscount rate raised to the power of the number of yearsDividing by (1 + discount rate)nQuestion 7 of 40 8. What is the final step in the DCF valuation process?Summing projected cash flowsForecasting terminal valuesDiscounting projected cash flowsCalculating intrinsic valueQuestion 8 of 40 9. What does it suggest if the intrinsic value derived from DCF is higher than the current market price?OvervaluationUndervaluationFair market valueNo conclusion can be drawnQuestion 9 of 40 10. Which DCF model applies a discount rate equal to the weighted average cost of capital to the free cash flow to the firm?Zero Growth ModelEnterprise DCF ModelEquity DCF ModelConstant Growth ModelQuestion 10 of 40 11. What does the Equity DCF Model primarily consider?Cost of equityDividend growthCapital expendituresWeighted average cost of capitalQuestion 11 of 40 12. What does the Adjusted Present Value (APV) model include in its calculation?Unlevered equity cash flow and interest tax shieldWeighted average cost of capitalEnterprise value and terminal valueDividend yield and earnings per shareQuestion 12 of 40 13. In the Economic Profit Model, what does the discounting process involve?Unlevered cash flow and terminal valueWeighted average cost of capitalEconomic profit stream and invested capitalFree cash flow to equity and cost of equityQuestion 13 of 40 14. Which DCF model considers the current year dividend and the rate of return on equity?Zero Growth ModelEnterprise DCF ModelEquity DCF ModelConstant Growth ModelQuestion 14 of 40 15. What does the Constant Growth Model calculate?Current price of equityFuture cash flowsTerminal valueExpected dividend after 1 yearQuestion 15 of 40 16. What does the Equity DCF Model focus on?Enterprise valueDividend discount and free cash flow to equityWeighted average cost of capitalForecasted market trendsQuestion 16 of 40 17. Which elements are considered in the Adjusted Present Value (APV) model?Free cash flow to the firm and equity risk premiumCost of equity and cost of debtInterest tax shield on debt and unlevered equity cash flowFuture dividends and current earningsQuestion 17 of 40 18. What does the Economic Profit Model discount using the weighted average cost of capital?Current year dividendsEconomic profit streamFree cash flow to equityTerminal valueQuestion 18 of 40 19. Which DCF model calculates the expected current price of equity using the rate of return on equity?Zero Growth ModelEnterprise DCF ModelEquity DCF ModelConstant Growth ModelQuestion 19 of 40 20. What does the Constant Growth Model evaluate?Future cash flowsTerminal valueDividend paymentsRate of return on equityQuestion 20 of 40 21. In the DCF method, what does the Cost of Capital primarily represent?Projected market trendsRisk associated with the investmentForecasted cash flowsIndustry benchmark ratesQuestion 21 of 40 22. When estimating future cash flows, what components are typically included?Operating income and taxes onlyOperating income, taxes, and CAPEXNet income and total liabilitiesCapital expenditures and market valueQuestion 22 of 40 23. What is the primary purpose of forecasting terminal values in DCF?To calculate present valueTo assess initial investmentTo represent future growth beyond projectionTo determine current market valueQuestion 23 of 40 24. How are projected cash flows discounted in the DCF method?Multiplying by the discount rateDividing by the discount rateDiscount rate raised to the power of the number of yearsDividing by (1 + discount rate)nQuestion 24 of 40 25. What is the final step in the DCF valuation process?Summing projected cash flowsForecasting terminal valuesDiscounting projected cash flowsCalculating intrinsic valueQuestion 25 of 40 26. What does it suggest if the intrinsic value derived from DCF is higher than the current market price?OvervaluationUndervaluationFair market valueNo conclusion can be drawnQuestion 26 of 40 27. Which DCF model applies a discount rate equal to the weighted average cost of capital to the free cash flow to the firm?Zero Growth ModelEnterprise DCF ModelEquity DCF ModelConstant Growth ModelQuestion 27 of 40 28. What does the Equity DCF Model primarily consider?Cost of equityDividend growthCapital expendituresWeighted average cost of capitalQuestion 28 of 40 29. What does the Adjusted Present Value (APV) model include in its calculation?Unlevered equity cash flow and interest tax shieldWeighted average cost of capitalEnterprise value and terminal valueDividend yield and earnings per shareQuestion 29 of 40 30. In the Economic Profit Model, what does the discounting process involve?Unlevered cash flow and terminal valueWeighted average cost of capitalEconomic profit stream and invested capitalFree cash flow to equity and cost of equityQuestion 30 of 40 31. Which DCF model considers the current year dividend and the rate of return on equity?Zero Growth ModelEnterprise DCF ModelEquity DCF ModelConstant Growth ModelQuestion 31 of 40 32. What does the Constant Growth Model calculate?Current price of equityFuture cash flowsTerminal valueExpected dividend after 1 yearQuestion 32 of 40 33. What does the Equity DCF Model focus on?Enterprise valueDividend discount and free cash flow to equityWeighted average cost of capitalForecasted market trendsQuestion 33 of 40 34. Which elements are considered in the Adjusted Present Value (APV) model?Free cash flow to the firm and equity risk premiumCost of equity and cost of debtInterest tax shield on debt and unlevered equity cash flowFuture dividends and current earningsQuestion 34 of 40 35. What does the Economic Profit Model discount using the weighted average cost of capital?Current year dividendsEconomic profit streamFree cash flow to equityTerminal valueQuestion 35 of 40 36. Which DCF model calculates the expected current price of equity using the rate of return on equity?Zero Growth ModelEnterprise DCF ModelEquity DCF ModelConstant Growth ModelQuestion 36 of 40 37. What does the Constant Growth Model evaluate?Future cash flowsTerminal valueDividend paymentsRate of return on equityQuestion 37 of 40 38. In the DCF method, what does the Cost of Capital primarily represent?Projected market trendsRisk associated with the investmentForecasted cash flowsIndustry benchmark ratesQuestion 38 of 40 39. When estimating future cash flows, what components are typically included?Operating income and taxes onlyOperating income, taxes, and CAPEXNet income and total liabilitiesCapital expenditures and market valueQuestion 39 of 40 40. What is the primary purpose of forecasting terminal values in DCF?To calculate present valueTo assess initial investmentTo represent future growth beyond projectionTo determine current market valueQuestion 40 of 40 Loading...
