FCF Projection Assumptions and Factors Quiz
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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?

  • 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?

  • Predictability of FCF (correct)
  • Sector
  • Business model
  • WACC

    • 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?

    <p>CAPM</p> Signup and view all the answers

    Which market risk premium range is most appropriate to use when calculating the cost of equity?

    <p>2%-3%</p> Signup and view all the answers

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