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    Corporate Finance Interview Questions Excel Template

    Uploaded by

    Extreme Tourism
    The document provides information and examples for calculating various corporate finance metrics such as NPV, IRR, WACC, and challenges with multiple IRR. It gives a sample project with $100M initial investment, $25M annual cash flows, and 13% required rate to calculate NPV (-$120.7M) and IRR (7.93%). It also discusses multiple IRR scenarios and compares NPV of two projects using individual and LCM approaches. Finally, it calculates WACC of 11.7% given equity, debt, and preference share weights and costs along with a 25% tax rate.

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    © All Rights Reserved
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    Corporate Finance Interview Questions Excel Template

    Uploaded by

    Extreme Tourism
    75 views8 pages
    The document provides information and examples for calculating various corporate finance metrics such as NPV, IRR, WACC, and challenges with multiple IRR. It gives a sample project with $100M initial investment, $25M annual cash flows, and 13% required rate to calculate NPV (-$120.7M) and IRR (7.93%). It also discusses multiple IRR scenarios and compares NPV of two projects using individual and LCM approaches. Finally, it calculates WACC of 11.7% given equity, debt, and preference share weights and costs along with a 25% tax rate.

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    Corporate Finance Interview Questions Excel Template

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    The document provides information and examples for calculating various corporate finance metrics such as NPV, IRR, WACC, and challenges with multiple IRR. It gives a sample project with $100M initial investment, $25M annual cash flows, and 13% required rate to calculate NPV (-$120.7M) and IRR (7.93%). It also discusses multiple IRR scenarios and compares NPV of two projects using individual and LCM approaches. Finally, it calculates WACC of 11.7% given equity, debt, and preference share weights and costs along with a 25% tax rate.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    75 views8 pages

    Corporate Finance Interview Questions Excel Template

    Uploaded by

    Extreme Tourism
    The document provides information and examples for calculating various corporate finance metrics such as NPV, IRR, WACC, and challenges with multiple IRR. It gives a sample project with $100M initial investment, $25M annual cash flows, and 13% required rate to calculate NPV (-$120.7M) and IRR (7.93%). It also discusses multiple IRR scenarios and compares NPV of two projects using individual and LCM approaches. Finally, it calculates WACC of 11.7% given equity, debt, and preference share weights and costs along with a 25% tax rate.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    of 8

    Corporate Finance Interview Questions Excel Template

    Visit: www.educba.com
    Email: info@educba.com
    Suppose a project has an initial investment of $100 million and has a 5 years life in which the CF generated per year is $25 m
    The company assumes that the risk of the project requires a required rate of 13%. We need to calculate
    the NPV and decide whether the project is worth investing in.

    Particlur Value
    r 0.13
    Annual CF 25,000,000
    Initial Investment 100,000,000
    Life (Years) 5

    NPV is calculated as the given formula given below


    NPV = -CF0 + CF1/(1+r)1 + CF2/(1+r)2 + CF3/(1+r)3 + CF4/(1+r)4 + CF5/(1+r)5

    NPV -12069218
    he CF generated per year is $25 million.
    d to calculate
    Suppose for the same project we need to find the IRR. We saw that NPV was negative for a 13% discount rate so the IRR wo
    There is no other easier way than hit and trial method to find the exact IRR, without using a financial calculator or Excel or a
    computer software. There is an interpolation method but that is also very time consuming and may not result in an exact an

    Year CF
    0 -100
    1 25
    2 25
    3 25
    4 25
    5 25

    IRR is calculated as the given formula given below


    IRR = -CF0 + CF1/(1+IRR)1 + CF2/(1+IRR)2 + CF3/(1+IRR)3 + CF4/(1+IRR)4 + CF5/(1+IRR)5

    IRR 7.93%
    iscount rate so the IRR would be lower than that.
    cial calculator or Excel or any other
    ay not result in an exact answer.
    The following are the challenges with IRR for a CF stream if there is:
    Multiple IRR and No IRR at all. Suppose we have the following CF stream:

    Year CF
    0 -1700
    1 1600
    2 1600
    3 1600
    4 1600
    5 -5200

    Multiple IRR is calculated as the given formula given below


    Multiple IRR = -CF0 + CF1/(1+IRR)1 + CF2/(1+IRR)2 + CF3/(1+IRR)3 + CF4/(1+IRR)4 + CF5/(1+IRR)5

    Multiple IRR 6.77%

    NPV is Calculated as

    Rate NPV
    5% ($96.01)
    20% $293.51
    40% $208.51
    60% $39.91
    80% ($92.06)

    NPV
    $350.00
    $300.00
    $250.00
    $200.00
    $150.00
    $100.00
    $50.00
    $0.00
    ($50.00) 0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
    ($100.00)
    ($150.00)
    We have the following two projects and their CF stream, The discount rate is 10%.

    Year Project A Project B


    0 -100 -100
    1 50 80
    2 80 20
    3 30

    Calculating the NPV Individually

    Year Project A Project B


    0 -100 -100
    1 50 80
    2 80 20
    3 30
    NPV $10.52 $10.72

    Calculating the NPV by Using LCM approach

    Year Project A Project B


    0 -100 -100
    1 50 80
    2 -20 20
    3 50 -70
    4 -20 80
    5 50 20
    6 80 30
    NPV $26.40 -$0.81

    Annuity Formula is calculated as

    Project A Project B
    Annuity $6.06 $6.18
    Suppose we are given the following information:

    WACC Weight Pre Tax Cost


    Equity 0.5 15%
    Debt 0.3 8%
    Preference Shares 0.2 12%
    Tax Rate 25%

    WACC is calculated as the given formula given below


    WACC  = Weightequity * Costequity + Weightpreference * Costpreference + Weightdebt*Costdebt * ( 1 - Tax Rate)

    WACC 11.70%

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