Interview Questions

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Company A buys company B with 100% debt. Company B has P/E of 10x and Company A has P/E of 15x. What interest rate is required on the debt to make the deal dilutive? Assume a 40% tax rate.
a year ago1 answer
Would the usage of cash and stock affect the premium on the deal?
a year ago1 answer
Company A (EV 100, MC 80, EBITDA 10, NI 4, Debt 60, Cash 40) acquires Company B (EV 40, MC 40, EBITDA 8, NI 2) using 100% debt at 10% interest and 25% tax rate. What is the sum of the pro forma EV/EBITDA and P/E multiples for the combined company?
5 months ago1 answer
If a company has a P/E of 20x, an EV/EBITDA of 10x, Interest Expense of 20m, a 5% interest rate, depreciation of 20m and a market cap of 200m, what is the company's tax rate?
a year ago1 answer
How does a increase in interest rates impact a DCF valuation?
5 months ago1 answer
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Walk me through an LBO.
a year ago1 answer
What makes a good LBO candidate?
10 months ago1 answer
How do you calculate free cash flow starting from revenue?
5 months ago1 answer
What are the drivers of an LBO?
3 months ago1 answer
If you build a DCF using levered free cash flow, what discount rate do you use and what value do you get?
a year ago1 answer
If you could only have two financial statements, which two would I choose and why?
10 months ago1 answer
Describe a difficult situation you faced. How did you handle it and what did you take away from the experience?
4 months ago1 answer
How would rising interest rates affect a DCF valuation?
5 months ago1 answer
In a DCF, which has a greater impact: a 10% change in WACC or a 10% change in revenue growth?
10 months ago1 answer
How to calculate Cost of Equity?
3 months ago1 answer
What is the discount rate?
3 months ago1 answer
How do you value a contract that pays out $500 annually?
3 months ago1 answer
Who has a higher WACC: McDonald's or a local high-end bistro?
4 months ago1 answer
Acquirer P/E is 15x. Target P/E is 20x. In an all-stock deal, is this accretive or dilutive?
4 months ago1 answer
What’s the difference between levered and unlevered free cash flow?
4 months ago1 answer

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Interview Questions

Company A buys company B with 100% debt. Company B has P/E of 10x and Company A has P/E of 15x. What interest rate is required on the debt to make the deal dilutive? Assume a 40% tax rate.

Would the usage of cash and stock affect the premium on the deal?

Company A (EV 100, MC 80, EBITDA 10, NI 4, Debt 60, Cash 40) acquires Company B (EV 40, MC 40, EBITDA 8, NI 2) using 100% debt at 10% interest and 25% tax rate. What is the sum of the pro forma EV/EBITDA and P/E multiples for the combined company?

If a company has a P/E of 20x, an EV/EBITDA of 10x, Interest Expense of 20m, a 5% interest rate, depreciation of 20m and a market cap of 200m, what is the company's tax rate?

How does a increase in interest rates impact a DCF valuation?

Walk me through an LBO.

What makes a good LBO candidate?

How do you calculate free cash flow starting from revenue?

What are the drivers of an LBO?

If you build a DCF using levered free cash flow, what discount rate do you use and what value do you get?

If you could only have two financial statements, which two would I choose and why?

Describe a difficult situation you faced. How did you handle it and what did you take away from the experience?

How would rising interest rates affect a DCF valuation?

In a DCF, which has a greater impact: a 10% change in WACC or a 10% change in revenue growth?

How to calculate Cost of Equity?

What is the discount rate?

How do you value a contract that pays out $500 annually?

Who has a higher WACC: McDonald's or a local high-end bistro?

Acquirer P/E is 15x. Target P/E is 20x. In an all-stock deal, is this accretive or dilutive?

What’s the difference between levered and unlevered free cash flow?

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