Adventis Fmc Level 2 Exam 2024 Questions And Answers | Already Passed

WACC formula {Ans: WACC = (%equity X cost of equity) + (%debt X cost of debt) X (1-T)}both measures take into account {Ans: the relationship of capital invested by the financial sponsor vs. capital returned over the life of the investment}assume that a company trades at 7.0x EBITDA but the average of comparable companies is 9.0x, what can we conclude {Ans: the company is being undervalued and the investor will look to buy shares because he realizes that the share price will increase Wall St. begins to value the company in-line with its peers}typical total debt/EBITDA {Ans: 4.0x-6.0x}subordinated debt {Ans: - requires interest payments only with the ability to voluntarily pay down principal with any excess cash flow - higher interest rates due to additional default risk}2 primary types of relative valuation {Ans: 1. comparable company analysis 2. acquisition comparables analysis}most common public trading comparable ratios {Ans: 1. EV/EBITDA 2. EV/Revenue 3. Net income/Earnings (share price/earnings per share)}high yield debt {Ans: interest only with the ability to pay down principal based on cash flow}target IRR's range from {Ans: 20-30%}formula for PV of terminal value {Ans: PV = TV/(1+r)^N}what will investors