Professional Documents
Culture Documents
CFI - FMVA Practice Exam Case Study A
CFI - FMVA Practice Exam Case Study A
May 2021
Notes
This Excel model is for educational purposes only and should not be used for any other reason.
All content is Copyright material of CFI Education Inc.
https://corporatefinanceinstitute.com/
ed to all written material, content layout, images, formulas, and code, are protected under international copyright and trademark laws.
tributed, or transmitted in any form by any means, including photocopying, recording, or other electronic or mechanical methods,
tain non-commercial uses permitted by copyright law.
Strictly Confidential
emark laws.
© Corporate Finance Institute. All rights reserved.
Model Inputs and Assumptions
All Figures in US$000's unless otherwise stated.
Valuation Assumptions
Tax Rate 27.50%
EBITDA Exit Multiple 10.0x
Equity Risk Premium 8.5%
Interest Rate 5.5%
© Corporate Finance Institute. All rights reserved.
Historical and Forecast Financial Information
All Figures in US$000's unless otherwise stated.
Balance Sheet
Assets
Cash & Cash Equivalents 0 $36,388 $35,494 $34,773
Accounts Receivable $5,000 $4,438 $4,734
Total Current Assets $41,388 $39,933 $39,508
Liabilities
Accounts Payable $6,000 $5,315 $6,378
Total Current Liabilities $6,000 $5,315 $6,378
Long-Term Debt $0 $0 $0
Total Liabilities $6,000 $5,315 $6,378
Shareholders' Equity
Share Capital $45,000 $45,000 $45,000
Retained Earnings $14,138 $24,543 $33,975
Total Shareholders' Equity $59,138 $69,543 $78,975
Total Liabilities and Shareholders' Equity $65,138 $74,858 $85,353
Financing Activities
Issuance (Repayment) of Debt $0 $0 $0
Issuance (Buy-back) of Equity $45,000 $0 $0
Cash (Used For) Generated From Financing Activities $45,000 $0 $0
Supporting Schedules
Change in Non-Cash Working Capital
Accounts Receivable $5,000 $4,438 $4,734
Accounts Payable $6,000 $5,315 $6,378
Total Non-Cash Working Capital ($1,000) ($877) ($1,644)
Change in Non-Cash Working Capital ($123) $767
Supplemental Information
EBITDA $23,750 $19,125 $18,000
$0 $0 $0 $0 $0 $0 $0 $0
$6,864 $7,371 $7,899 $8,448 $9,020 $9,616 $10,235 $10,880
$0 $0 $0 $0 $0 $0 $0 $0
$0 $0 $0 $0 $0 $0 $0 $0
$0 $0 $0 $0 $0 $0 $0 $0
$59,945 $61,444
$43,460 $46,083
$16,485 $15,361
($4,496) ($4,608)
($5,095) ($5,223)
$6,894 $5,530
($1,896) ($1,521)
$4,998 $4,009
$33,435 $27,930
$5,912 $6,060
$39,347 $33,990
$126,059 $136,122
$165,406 $170,112
$11,550 $12,247
$11,550 $12,247
$0 $0
$11,550 $12,247
$45,000 $45,000
$108,856 $112,865
$153,856 $157,865
$165,406 $170,112
$4,998 $4,009
$5,095 $5,223
$526 $549
$10,619 $9,781
($14,913) ($15,286)
($14,913) ($15,286)
$0 $0
$0 $0
$0 $0
$37,729 $33,435
($4,294) ($5,505)
$33,435 $27,930
$5,912 $6,060
$11,550 $12,247
($5,637) ($6,186)
$526 $549
$116,241 $126,059
$14,913 $15,286
($5,095) ($5,223)
$126,059 $136,122
$11,989 $10,753
3.4x 2.8x
2.9x 2.3x
0.11x 0.09x
1.68x 2.00x
27.50% 25.00%
-8% -8%
-9% -9%
-27.5% -27.5%
© Corporate Finance Institute. All rights reserved.
Valuation and Return Analysis
All Figures in US$000's unless otherwise stated.
DCF Analysis
Time Periods
Date 1/1/2021
Date for NPV (Annual Cash Flows)
Year Fraction
EBITDA
Terminal Value
Investment Analysis
Date
Date for NPV (Annual Cash Flows)
Year Fraction
Investor IRR
Investment Amount
Adjusted Unlevered Free Cash Flow
Investment Cash Flows
Investor IRR
1 2 3 4 5 6 7 8
12/31/2021 12/31/2022 12/31/2023 12/31/2024 12/31/2025 12/31/2026 12/31/2027 12/31/2028
$920
$37,970
$38,890
$34,773
$0
$73,663 $73,712
$49
-$8,811
$54,398
$45,586
$50,000
$0
$95,586
($143,380)
$0 $525 $12 ($988) ($2,037) ($3,139)
($143,380) $525 $12 ($988) ($2,037) ($3,139)
-6.37%
($43,014)
$0 $525 $12 ($988) ($2,037) ($3,139)
($43,014) $525 $12 ($988) ($2,037) ($3,139)
11.9%
2029E 2030E
9 10
12/31/2029 12/31/2030
$11,989 $10,753
$107,527
$11,989 $10,753
($5,095) ($5,223)
$6,894 $5,530
($1,896) ($1,521)
$5,095 $5,223
($14,913) ($15,286)
$526 $549
($4,294) ($5,505)
($4,294) ($5,505)
$0 $107,527
($4,294) $102,022
12/31/2029 12/31/2030
12/31/2029 12/31/2030
1.0 1.0
($4,294) ($5,505)
$0 $107,527
($4,294) $102,022
($4,294) $102,022
($4,294) $102,022
($4,294) $102,022
($4,294) $102,022
© Corporate Finance Institute. All rights reserved.
Weighted-Average Cost of Capital (WACC)
All Figures in US$000's unless otherwise stated.
Unlevered
Company Levered Beta Debt Equity Debt / Equity Tax Rate Beta
Company A 1.87 $550 $800 68.8% 26.5% 1.25
Company B 1.14 $200 $900 22.2% 30.0% 0.98
Company C 1.46 $355 $950 37.4% 28.0% 1.15
Company D 0.92 $100 $850 11.8% 32.5% 0.85
Company E 1.22 $300 $1,200 25.0% 35.0% 1.03
Median 1.22 25.0% 1.03
Company XYZ WACC Calculation
Capital Structure
Amount %
Current Debt $30,000 31.3%
Current Equity $66,000 68.8%
Total $96,000 100%
Debt / Equity
Cost of Debt
Cost of Debt 5.5%
Tax Rate 27.5%
After-Tax Cost of Debt 4.0%
Cost of Equity
Risk-Free Rate 2.5%
Equity Risk Premium 8.5%
Levered Beta 1.37
Cost of Equity 14.1%
WACC 11.0%