General — Investment Banking Practice Questions

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1. A target company is being acquired for $60.00 per share. Its… — What is the control premium being paid in this
2. Which scenario provides a higher IRR?
3. What is the Multiple on Invested Capital (MOIC)?
4. Which valuation methodology would likely produce the 'floor' valuation for a mature industrial company in a st
5. Which buyer is generally able to pay a higher premium in an auction for a mature industrial company, and why?
6. Which of the following changes, held in isolation, would most likely achieve this?
7. A company has $100 million of Preferred Stock with a 6% divi… — When calculating Enterprise Value, why is this
8. If a company has an Unlevered Free Cash Flow (UFCF) of $500 million in Year 5, a WACC of 10.0%, and a perpetui
9. When calculating the WACC, why is the cost of debt multiplied by (1 - t)?
10. What is the primary impact on the LBO returns?
11. Which component of an LBO's return is considered the 'least predictable' and is often set to zero in conservat
12. What is its Enterprise Value?
13. An analyst is calculating the Terminal Value of a company in… — If the WACC is 10.0%, what is the Present Valu
14. If a company's Net Debt is negative, what is the relationship between its Equity Value and Enterprise Value?
15. In a merger model, the 'Pro Forma' share count is calculated as:
16. What is the control premium?
17. Why is EBITDA often used as the denominator for Enterprise Value multiples, rather than Net Income?
18. If the company generates $12.0 million in Net Income, what is its Return on Equity (ROE)?
19. Which of the following multiples would be most useful for a capital-structure-neutral comparison?
20. An acquirer with a current P/E multiple of 20.0x is consider… — Without considering synergies, will this deal
21. What is the Multiple on Invested Capital (MOIC)?
22. What is the Multiple on Invested Capital (MOIC)?
23. What is the 3-year Compound Annual Growth Rate (CAGR)?
24. If the debt remains $600 million at exit, what is the MOIC?
25. What is the Multiple on Invested Capital (MOIC)?
26. In an LBO, if the entry multiple is 8.0x EBITDA and the exit multiple after 5 years is also 8.0x EBITDA, how c
27. An analyst calculates a DCF and determines the Enterprise Va… — What is a potential concern with this result?
28. A company has a $200 million 'Noncontrolling Interest' (NCI)… — Why is this added in the Enterprise Value calc
29. When calculating Enterprise Value using the if-converted method, how is this bond treated?
30. If the target has $60 million in net income, which structure is more accretive to the buyer's EPS?