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Questions and Answers
When projecting Free Cash Flow (FCF) in a DCF analysis, which historical data should be considered for creating assumptions?
When projecting Free Cash Flow (FCF) in a DCF analysis, which historical data should be considered for creating assumptions?
- Maturity of business
- Historical EBIT margins
- Classes of debt securities
- Historical interest expense (correct)
What factors play a role in determining the length of the projection period in a DCF analysis?
What factors play a role in determining the length of the projection period in a DCF analysis?
- Predictability of FCF (correct)
- Sector
- Business model
- WACC
Which variables are commonly sensitized in a Discounted Cash Flow (DCF) analysis?
Which variables are commonly sensitized in a Discounted Cash Flow (DCF) analysis?
- WACC and Exit multiple
- WACC and EBIT margins
- IRR and EBIT margins (correct)
- Exit multiple and IRR
What method is typically used to calculate the cost of equity in financial valuation?
What method is typically used to calculate the cost of equity in financial valuation?
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Which market risk premium range is most appropriate to use when calculating the cost of equity?
Which market risk premium range is most appropriate to use when calculating the cost of equity?
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