Hard Principles of Finance Practice Questions

73 free hard-difficulty Principles of Finance questions, drawn live from KomFi's calibrated bank. These are the items that separate top scorers — every one carries a full explanation and trap analysis once you sign in.

1. If the WACC is 10%, what is the NPV of the project, accounting for the depreciation tax shield?
2. In the context of capital budgeting, if two projects are mutually exclusive and have different lives, which me
3. If the exit multiple is also 10x, what is the investor's IRR?
4. If the cost of capital is 10%, what is the Modified Internal Rate of Return (MIRR)?
5. What is the sponsor's IRR?
6. What is the approximate annualized Internal Rate of Return (IRR) for the sponsor?
7. If the tax rate is 25%, what is the net initial investment for this capital budgeting decision?
8. If high demand occurs, the firm can spend another 15M at the start of Year 2 to expand, adding 6M in annual CF
9. Using a 10% discount rate, which machine should be selected and what is its EAA?
10. A firm has an EV/EBITDA of 12.0 and an EV/EBIT of 16.0. If the firm's tax rate is 25% and it has no debt, what
11. If the marginal tax rate is 30%, what is the Weighted Average Cost of Capital (WACC)?
12. If the firm targets a new capital structure with a debt-to-equity ratio of 0.80, what will be its new levered
13. The acquirer has 100 million shares outstanding trading at$100each. The target has20million shares trading at7
14. Using Hamada's Equation and assuming a marginal tax rate of 25%, what is the new estimated cost of equity if t
15. A firm has Fixed Operating Costs of $500,000, Variable Costs… — What is the Degree of Total Leverage (DTL) for
16. A company has a target debt-to-equity ratio (D/E) of 0.60. T… — Based on this target structure, what is the WA
17. If the private firm intends to operate with a debt-to-equity ratio of 1.00 at a 30% tax rate, what is the appr
18. A firm has 200,000,000 in Debt and 200,000,000 in Equity. After an inventory write-down of 50,000,000 with a 4
19. Given R_f = 3%, ERP = 5%, a 25% tax rate, and a tax-shielded after-tax cost of debt of 4.5% with a target D/V
20. What is the levered β that should be used to find the cost of equity for this project?
21. If the pre-tax cost of debt is 6% and the marginal tax rate is 25%, what is the new cost of equity according t
22. If the cost of equity is 12% (60% weight) and after-tax debt is 5% (30% weight), what is the adjusted WACC?
23. A firm with a 25% statutory tax rate has $500M of perpetual… — What is the most defensible critique of this tr
24. For estimating the firm's WACC as a discount rate for EXPECTED cash flows, what is the key conceptual error?
25. Using the 5-way DuPont Decomposition, which component reflects the 'Interest Burden'?
26. What is the Free Cash Flow to the Firm (FCFF)?
27. A firm has an M-score of -1.50 according to the Beneish mode… — How should an analyst interpret this signal?
28. What is the FCFF?
29. What is the CFO assuming no other changes?
30. A profitable firm reports a $40M increase in accounts receiv… — Holding all else equal, what is the net effect

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