FINANCIAL MODELLING WALL
STREET PREP EXAM 2025 WITH REAL
QUESTIONS AND VERIFIED CORRECT
ANSWERS | ALREADY GRADED A+ |
GUARANTEED PASS | FINANCIAL
MODELLING EXAM FINAL [NEWEST]
List 6 major individual income statement and balance sheet items that are not constant percentages of sales - ANSWER- 1. Depreciation
- Interest Expense
- Taxes
- Property Plant and Equipment
- Short Term Debt
- Long term debt
Fully describe and explain the relationship between external funds needed and sales growth rate - ANSWER- External funds needed is very sensitive to sales growth rate, they have a positive linear relationship because most items are a percentage of sales
Fully explain why the discount rate is increasing over years - ANSWER- discount rate increases over the years because the inflation rate and the real cost of capital increases each year. These two figures (real cost of capital and inflation rate) are a part of calculating discount rate, they have a direct relationship
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What is the main advantage of forecasting the inflation rate separately for calculating NPV? - ANSWER- It assures that we are consistent in how we treat inflation when we apply it to NPV calculations, and include it as a component in the discount rate
State all the steps for calculating the Operating Cash Flows - ANSWER- 1. Start with Sales and subtract VC to get gross margin
- Subtract TFC (depreciation plus cash fC) to get operating profit
- Subtract taxes to get net profit
- Add back depreciation and you get operating cash flows
Fully explain why NPV falls from a higher number to a lower number even though the investment in working capital in years 1-4 is fully recovered in years 5-7 - ANSWER- PV of earlier cash outflows was greater than PV of later cash inflows
If the Unit Sales Scale Factor is 90% what is the maximum date 1 real cost of capital at which the project will be acceptable? Why? - ANSWER- The Unit Sales scale factor is $652 at 11% because any higher percentage the NPV would be negative and the project would have to be rejected
If the Date 1 Real Cost of Capital is 17%, what is the minimum unit sales scale factor at which the project will be acceptable? Why? - ANSWER- The minimum unit sales scale factor at which the project will be acceptable is 110%, there with a 17% costs of capital your NPV is $422, which is the lowest value yielded by an 11% cost of capital greater than 0 for NPV
Fully explain the formula for calculating the With Investment Depreciation - ANSWER- =Without Investment Depreciation + (-New Investment Depreciation - Salvage Value) / Number of years to depreciate
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