Module II· Interview Essentials — ValuationBasic
Question
Walk me through a DCF — give the standard answer for an IB interview.
Answer
1-minute answer
- Forecast FCFs for 5–10 years
- `UFCF = EBIT × (1 − t) + D&A − Capex − ΔNWC`
- Terminal Value:
- Gordon: `FCF × (1+g) / (WACC − g)`, or
- Exit Multiple: `Terminal EBITDA × Multiple`
- Discount at WACC:
- `WACC = (E/V × Re) + (D/V × Rd × (1−t))`
- Re via CAPM: `Rf + β × ERP`
- Sum of all PVs = Enterprise Value
- EV − Net Debt = Equity Value → / shares = implied share price
Pitch tip
Keep the answer to 60–90 seconds. A clear structure signals preparation.