I was asked this question -
A hypothetical company is like a black box. The blackBox guarantees an inflation adjusted Free Cash Outflow of $100 per month for the next 5 years. There is absolutely no uncertainty around this FCF. What is the EV of the blackBox? How will you calculate the stock price if there are only 10 shares outstanding ? No further info is available.
My problem is - is there any catch in this ?
| +320 | UBS Tech MD hires Son (from no-name college) as an Intern | 54 | 6h |
| +89 | [Official] 2026 IB Analyst Bonus Megathread (with 2025 Consolidated Pay and Perks/Benefits) | 12 | 1d |
| +53 | Is DCM actually underrated ? | 20 | 3h |
| +46 | Are all Tech / TMT groups sweaty? | 31 | 12h |
| +46 | Evercore Intern Seizure | 6 | 12m |
| +41 | UBS Groups Ranked by Future Outlook | 20 | 5d |
| +41 | JPM M&A is Gone??? Purely Coverage Banking??? | 20 | 11h |
| +37 | Am I behind? 31 Year Old Analyst | 10 | 15h |
| +32 | UVA McIntire vs Cornell Dyson for IB | 19 | 3d |
| +32 | Losing my personality in Banking | 5 | 1d |
Career Resources
Get instant access to lessons taught by experienced private equity pros and bulge bracket investment bankers including financial statement modeling, DCF, M&A, LBO, Comps and Excel Modeling.
Nah. Simple present value calculation. Just need to get a discount factor.
Value = 10 / discount rate
Free Cash Outflow of $100 - was that a typo or does it actually imply a negative FCF for the next 5 years.
Maybe that's where the trick was?
1) calculate the nominal cash flows based on $100 real cash flows and the expected inflation rate. 2) discount the nominal cash flows at the risk free rate (5 year t-notes since that is the only comparable risk free security).
Sum of those cash flows is the total EV, that sum divided by 10 is the per share value.
Qui officiis fugit architecto eveniet autem id dolores. Nemo ea eius voluptas dignissimos quis nesciunt. Ea molestias culpa eos quia illum amet. Dignissimos rem quidem perferendis reprehenderit voluptatibus et. Sunt beatae vel quas ipsum dolore mollitia. Vero consectetur voluptate molestias ea est assumenda impedit.
Quo sequi neque non suscipit. Consequatur vel error delectus nobis consequuntur sapiente ut velit. Incidunt enim consequatur expedita quia. Maxime nulla et amet maiores enim nam maxime. Omnis officia qui ipsa fugiat deserunt consequuntur vel saepe.
Dolorem dignissimos blanditiis officia odio quas occaecati enim. Quis voluptates iusto soluta est ipsam in qui. Qui sit ipsam sint est velit sunt. Dolorum magnam maxime qui omnis quos. Nulla illo unde soluta voluptatem quia dolores nam. Reprehenderit in ipsa reprehenderit voluptatem sint. Modi nostrum temporibus rerum laudantium nihil dolorum laboriosam molestiae.
Ratione quasi quasi aut enim. Non voluptatem suscipit quis ratione. Nesciunt quia cupiditate maxime laudantium officiis ea.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...