2. Valuation
Dcf Basics — Quiz
Test your understanding of dcf basics with 5 practice questions.
Practice Questions
Question 1
When constructing a Discounted Cash Flow (DCF) model, which of the following is the most appropriate method for determining the terminal value when a company is expected to grow at a constant rate indefinitely?
Question 2
Which of the following best describes the relationship between the discount rate and the present value of future cash flows in a DCF model?
Question 3
When calculating Free Cash Flow (FCF) for a DCF model, which of the following is typically added back to Net Income?
Question 4
A company has a projected Free Cash Flow (FCF) of $2,500$ in Year 1, $3,000$ in Year 2, and $3,500$ in Year 3. If the discount rate is $7\%$\text{, what is the present value of the FCF for Year 3?}$$
Question 5
Which of the following is a key assumption when using the Gordon Growth Model (GGM) to calculate terminal value in a DCF model?