Am I missing something or does Rosenbaum not have a PGM calculation in his example DCF model. Is it typical not to have this calculation in your DCF model?

Why do you use an exit multiple to calculate terminal value? This makes no sense to me. I would think that it would make more sense to project a growth rate, then project free cash flow infinitely then take the sum of the total cash flow and discount it by WACC. And you wouldnt have to actually even project it infinitely, just until the net present value of the cash flow =~0

I've heard interview questions where the interviewee is asked to calculate the beta of roulette. Does anyone know the answer to this question? I assume it would be 0 because the outcome of roulette has no correlation with the market...

Can someone tell me why more debt is going to lead to a higher enterprise value? I am having trouble understanding this conceptually. I do not understand why debt adds value to a business...

Can someone tell me why noncontrolling interest isnt included in equity value? If noncontrolling interest is interest in voting stock, isnt voting stock included in basic shares outstanding?

Does anyone have any insight/has anyone gotten this question in an interview:

"Three scenarios of cash flow increases, decreases, remains flat over 5 years. Give example of three roles that would like to see each of the three scenarios."?

Would be very appreciative of what the correct answer would be for a few different scenarios. I'm guessing it's something like: Q: "If cash flows from financing went down $100, what types of roles would want to see that?"

If anyone can shed more light I'd be grateful.

Thanks.

I got these two questions with Citi M&A group. please feel free to share your thoughts and thanks for your help in advance.

1. What certain adjustments on the income statement you have to make in an M&A transaction, i.e. foregone interest income on cash?

2. When company A is buying B, would you expect the transaction to create deferred tax assets or liabilities?

Thanks a lot.

Not what I usually post but bear with me. OK, my ex and I keep in touch still and we're still pretty good friends now. We had a pretty ugly break-up and have had major arguments after the fact (I mention this for context).

I met a friend of hers a while back (I doubt she remembers me), and now she's in the same city as me. She was pretty hot and still is judging from her Facebook pictures. So my question is, how can I get my ex to set me up with that friend? Couple of things to note:

1) Although, I wasnt, my ex claimed I was possessive. Utter crap because no other girl has ever said that to me. So I'm worried she might mention this and screw things up for me.

2) As mentioned, an ugly break up but friends since. We've had our ups and downs. How does that effect me do you think?

1. What to use for WACC: %D and %E from the current balancesheet or "optimal" %D and %E? How to get the optimal D/E ratio, aka lowest WACC?

2. How do you get the beta (I said from Bloomberg and comps, unlever and relever blah blah), then was asked what if the two are dramatically different?

Could somebody please list in a simple manner when for EV/EBITDA and P/E multiples would one use NTM, LTM and 1yr-forward numbers? I'm confused with that.

Hellow fellow monkeys,

One of the MDs I managed to get in contact has asked me to prepare a full blown model and has passed me the case study:

http://depositfiles.com/files/ynssu1i2i

This is an Indian company's case study and I am not so familiar with the technical concepts used in this part of the world. Can anyone tell me how to use assumption#11 on page 3. This assumption is used in exhibits 6a.2 and 6a.7

So when people say firms like Evercore are extremely technical what exactly does that mean?

WIll they be asking very detailed financial statement questions that ensure candidates are fully familiar with the statements?
Are they asking advanced technicals such as levered beta?
Or does it get to technicals that no candidates will know but will just have to explain to the best of their understanding?

How much can they expect a prospective summer analyst to know?

Does anyone know where to find more advanced interview questions that are not in the BIWS or WSO guides?

Or if people can post the hardest questions that they have gotten asked that were not in the guides that would be great.

Thanks.

1. Are preferred stocks included in the calculation of Basic Shares Outstanding? If yes, do they have any special treatment?

2. Let's suppose two investors are doing LBO and putting in $125m each ($250m total) for $1b transaction ($750m debt). Once the transaction has been completed what is shareholding structure of the company? Partner A=B= $125/$1000 = 12.5% ?

3. In the above case, over the five year period the investors are paying off the debts and at the end of 5 years intend to sell the company. I understand that the equity value has increased since they have been paying off debt over this period. can someone put this mathematically and show the possible shareholding structure at the end of 5 years

Could somebody list how Equity in Affiliates flows through 3 financial statements in each of the 3 consolidation scenarios? Or at least refer to a document/page that describes how 3 statements are impacted (not what are 3 consolidation methods).

How do you estimate minimum cash balance for the company? 2 ways I heard about are: 1) keep it equal to cash balance on B/S and 2) based on Net Working Capital. Is any of those methods preferred? Is there any other school of calculation that? And, if NWC method, then what exactly do you include in calculation (like include or excl. cash)?

hi all,

i got a technical question. do we need to deduct Term Deposits (less than 1 year but over 3 months) in calculating EV (like what we do for Cash)? it is a normal company, not a financial institution. thanks.

best to all!

Hey guys- I'm an analyst at a BB just curious if anyone recommends materials on advanced law, accounting, tax issues for M&A? I'm looking for something that goes beyond Macaubacus and the common investment banking books most people have.

Thanks in advance

I had pretty much aced the super day recently at a middle market firm which had brainteasers and technical questions until I was stumped by this question.

If a company lost a lawsuit and the SEC has imposed a $100 million fine, payable $20 million each year, How would it impact the 3 financial statements :
1) on Dec 31st

2) on Jan 1st

Any thoughts on this fellows. I would appreciate confident answers rather than random guesses.

Hello guys,

Thanks for the forum, very helpful. I have a few questions about DCF and would appreciate your replies:

1. I understand that in finding the WACC, the "appropriate" capital structure for the target should be used and not the current capital structure. How do you go about finding this appropriate structure in practice? Is it based on comps?

2. Can this capital structure change over time in modelling of DCF? For example if we assume to decrease it a lot in 3 years, can that be reflected in the model? Or would an lbo model be the only way out for that?

3. In CAPM, why do we not reward investors for unsystematic risk?

4. When unlevering the betas of comparable companies, do we use the "appropriate" capital structure of the industry or do we use the "actual" capital structure of the industry? And i understand that while relevering the beta, we use the "appropriate" capital structure for the target, right?

5. In the WACC formula, for the debt part the formula is [Cost of debt * (1-Marginal Tax Rate) * (E/E+D)]. Two questions here:

Hi all, basically I am trying to understand how the PEs account for their investments in their financial statements.

My understanding is:

1. Pension funds invest in Blackstone and this money:

Increases assets (cash coming in)
increases liabilities (funds coming from pension fund)

2. BX invests in a company:

Decreases cash (Asset)
Increases Investment (Asset)

3. On re-valuation of the investee company, the value of this investment (Step 2) will increase and we'll have a corresponding gain on the income statements

4. Is that correct? Or is some other form of structure commonly used so that the investee companies wouldn't show on BX's balance sheet? Like off-balance sheet transactions as they are called.

Note: Blackstone is a purely hypothetical example above

I just joined a HF as an investment analyst (equities) and doesn't work on the trading side. My boss gave this order to our broker for an options trade and asked me to think about several follow up questions over the weekend (supposedly to broaden my skill-set beyond research). I haven't taken an options class and would really appreciate your help. The order he gave was:

XYZ 29Apr10 6.5 AC 6.26 Ref. Delta=25%, Price= 0.07/, Vol= 14.25%/

Suppose XYZ above is the ticker.

His questions were:

* What does the above order mean?
* Calculate the put-call parity
* Determine the price of call when stock is $6.30
* Verify that 0.07 is actually 14.25% volatility
* calculate price of option if it is based on 15% volatility

I just joined a HF as an investment analyst (equities) and doesn't work on the trading side. My boss gave this order to our broker for an options trade and asked me to think about several follow up questions over the weekend (supposedly to broaden my skill-set beyond research). I haven't taken an options class and would really appreciate your help. The order he gave was:

XYZ 29Apr10 6.5 AC 6.26 Ref. Delta=25%, Price= 0.07/, Vol= 14.25%/

Suppose XYZ above is the ticker.

His questions were:

* What does the above order mean?
* Calculate the put-call parity
* Determine the price of call when stock is $6.30
* Verify that 0.07 is actually 14.25% volatility
* calculate price of option if it is based on 15% volatility

Hi guys,

This question is for anyone who has used the WSO tech. interview guide.

Is this guide good for S&T? If not, does anyone know of any good guides for technical S&T positions?

Additionally, does anyone have any suggestions for tech. preparation for an options trading associate role?

Thanks

I had a finance interview last week where the interviewer asked me what are some of the worksheet tabs that I'd have in a M&A model. I answered acq income statement, target income statement, terms of the deal, synergy, accretion/dilution, pro-forma income statement. I'm pretty sure that's the right answer. He also asked me how to estimate synergy and I said something about transaction comps and also looking at overlapping divisions, etc. I'm not sure if that's the complete answer he was looking for but it was good enough.

It got me thinking about what kinds of questions should be expected if you say you've done a M&A model before. What have you guys gotten during interviews?

So I'm not a finance major but using vault/wso guides i was able to BS my way through techincals for first round.
However, they called me for the second round and I need to study up on this stuff and I don't have much time.
Where can I learn the advanced stuff in short time?

How would you go about this one:

What are the credit considerations for opening a garden centre in HK?

I have read the Vault guide, ibankingfaq.com, and the WSO technical guide and have a good understand of everything in these guides. Does anyone know of a good place for more advanced technical questions?