Discounted Cash Flow (DCF) — Investment Banking Mock Interview
Walk through a complete discounted cash flow analysis from revenue projections to terminal value, then tackle advanced variations including levered DCF, beta unlevering, and pre-revenue startup valuation.
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Key Topics Covered
Full DCF Walkthrough & Unlevered Free Cash Flow
Walks through a complete DCF from start to finish, covering how to project revenue, derive UFCF from EBITDA, and discount cash flows to present value. Includes a detailed revenue-to-UFCF waterfall.
WACC, CAPM & Discount Rate Construction
Covers how to build WACC from its components including cost of equity via CAPM, after-tax cost of debt, and capital structure weights. Explores what drives each input and the U-shaped WACC curve theory.
Terminal Value: Gordon Growth vs. Exit Multiple
Compares the two approaches to terminal value, explains when each is more appropriate, addresses the red flag of terminal value representing ninety percent of total value, and covers sanity-checking implied growth rates.
When DCF Fails: Cyclical, Speculative & Pre-Revenue Companies
Explores DCF limitations for unpredictable cash flows, the coal mine versus Gordon Growth problem, gold mine and speculative tech company DCF modifications, and alternative approaches like the VC method and scorecard method for startups.
Advanced DCF: Levered DCF, Beta Unlevering & Adjustments
Tackles harder variations including levered versus unlevered DCF mechanics, converting between asset and equity beta using the Hamada equation, LIFO-to-FIFO inventory adjustments, stock-based compensation treatment debate, and pandemic-era projection modifications.
How to Prepare for Discounted Cash Flow (DCF) Interviews
Be able to walk through a DCF from start to finish in under two minutes. The basic session demonstrates the full walkthrough structure that interviewers expect, and a confident overview before diving into details signals strong preparation.
Know the UFCF formula cold and understand why each component exists. The sessions trace the revenue-to-UFCF waterfall in detail, and interviewers will test whether you understand the economic logic behind subtracting taxes, adding back D&A, and deducting capital expenditures.
Understand the intuition behind every WACC input. If an interviewer asks why declining debt levels affect cost of equity and WACC differently, you should be able to explain the risk-shifting logic, not just recite the formula. The advanced session covers this exact scenario.
For terminal value questions, always mention both methods and be ready to explain which you would use in a given situation. The advanced session includes scenarios like a coal mine where Gordon Growth fails entirely, testing whether you can identify when a methodology breaks down.
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About This Discounted Cash Flow (DCF) Mock Interview
These sessions develop complete command of the most fundamental intrinsic valuation methodology. The basic session covers the full DCF walkthrough, unlevered free cash flow definition and calculation, time value of money, projection period rationale, WACC construction via CAPM, the revenue-to-UFCF waterfall, Gordon Growth versus exit multiple terminal value, when DCF is inappropriate, cyclical industry handling, and stock-based compensation treatment. The advanced session pushes into asset beta versus equity beta, terminal value interpretation when it represents ninety percent of value, coal mine versus Gordon Growth analysis, gold mine DCF construction, speculative tech company modifications, pre-revenue startup valuation with the VC method, capex versus expense versus revenue impact ranking, the U-shaped WACC curve, LIFO-to-FIFO adjustments, levered DCF mechanics, and pandemic-era projection adjustments.
This topic is part of the Core Concepts section of our investment banking mock interview library. It includes 2 sessions covering both basic and advanced difficulty levels. Each session includes multi-speaker audio with realistic interviewer questions and candidate responses, plus a full interactive transcript you can follow along with or study independently.
Audio Recording
45 minutes of multi-speaker audio
Full Transcript
Interactive transcript with timestamps
1 Basic + 1 Advanced
Basic & Advanced
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Analyst
I personally found that the 'IB Vine Select' collection had some of the exact questions I was asked in my Qatalyst interviews.
Analyst
Thanks for starting up IB Vine. Couldn't have landed my offer without your help!
User Story
I honestly think you're doing gods work since IB Vine democratizes the whole interview process and helps a lot of students ace their interviews.
Analyst
I found this website really helpful, which also helps me better prepare for the technical interview in IBD position and get an offer.
Seen on WallStreetOasis
Check out IB Vine, specifically the 'IB Vine Select' questions. Once you can get a handle of those, it seems like you are in a spot where you're applying the concepts rather than simply memorizing them
Analyst
I've used IB Vine for my recruitment, and I could not imagine the journey without it. Thank you for creating a phenomenal resource.
Seen on WallStreetOasis
Beyond the 400 questions guide, try to understand a deeper level and the underlying concepts of the questions being asked. Use ibvine, it really helps.
Seen on WallStreetOasis
IB Vine has excellent questions, especially multistep ones. In my experience I've gotten grilled on accretion/dilution, bond math, and merger model questions. IB Vine has great practice for all of those.
User Story
As a nontraditional transfer student who has been rendered unavailable to many resources at my university (Leadership positions at clubs, immediately behind the recruiting cycle, etc.) IB Vine has been an absolute game changer in my IB prep.
Seen on WallStreetOasis
From my experience interviewing FT for IB, it’s not enough to just know the 400 questions anymore (it’s a good starting point) but to look at even more advanced questions. Would recommend IB Vine.
Seen on Twitter
heard all the new kids use IB Vine now. the questions on IB Vine helped me get the concepts down when I had to recruit and make a lot of BB/MM interviews easier than I expected for techs
User Story
Just got off the phone with a kid who interned at a Dallas PE firm. He mentioned that IB Vine helped him secure that internship as well as his Summer Analyst offer, especially since he came from a non-target with no resources.
Analyst
The IB Vine technical prep is beyond helpful, it's so much more fun quizzing myself every now and then vs. reading through the guides again.
Analyst
I personally found that the 'IB Vine Select' collection had some of the exact questions I was asked in my Qatalyst interviews.
Analyst
Thanks for starting up IB Vine. Couldn't have landed my offer without your help!
User Story
I honestly think you're doing gods work since IB Vine democratizes the whole interview process and helps a lot of students ace their interviews.
Analyst
I found this website really helpful, which also helps me better prepare for the technical interview in IBD position and get an offer.
Seen on WallStreetOasis
Check out IB Vine, specifically the 'IB Vine Select' questions. Once you can get a handle of those, it seems like you are in a spot where you're applying the concepts rather than simply memorizing them
Analyst
I've used IB Vine for my recruitment, and I could not imagine the journey without it. Thank you for creating a phenomenal resource.
Seen on WallStreetOasis
Beyond the 400 questions guide, try to understand a deeper level and the underlying concepts of the questions being asked. Use ibvine, it really helps.
Seen on WallStreetOasis
IB Vine has excellent questions, especially multistep ones. In my experience I've gotten grilled on accretion/dilution, bond math, and merger model questions. IB Vine has great practice for all of those.
User Story
As a nontraditional transfer student who has been rendered unavailable to many resources at my university (Leadership positions at clubs, immediately behind the recruiting cycle, etc.) IB Vine has been an absolute game changer in my IB prep.
Seen on WallStreetOasis
From my experience interviewing FT for IB, it’s not enough to just know the 400 questions anymore (it’s a good starting point) but to look at even more advanced questions. Would recommend IB Vine.
Seen on Twitter
heard all the new kids use IB Vine now. the questions on IB Vine helped me get the concepts down when I had to recruit and make a lot of BB/MM interviews easier than I expected for techs
User Story
Just got off the phone with a kid who interned at a Dallas PE firm. He mentioned that IB Vine helped him secure that internship as well as his Summer Analyst offer, especially since he came from a non-target with no resources.
Analyst
The IB Vine technical prep is beyond helpful, it's so much more fun quizzing myself every now and then vs. reading through the guides again.
Analyst
I personally found that the 'IB Vine Select' collection had some of the exact questions I was asked in my Qatalyst interviews.
Analyst
Thanks for starting up IB Vine. Couldn't have landed my offer without your help!
User Story
I honestly think you're doing gods work since IB Vine democratizes the whole interview process and helps a lot of students ace their interviews.
Analyst
I found this website really helpful, which also helps me better prepare for the technical interview in IBD position and get an offer.
Seen on WallStreetOasis
Check out IB Vine, specifically the 'IB Vine Select' questions. Once you can get a handle of those, it seems like you are in a spot where you're applying the concepts rather than simply memorizing them
Analyst
I've used IB Vine for my recruitment, and I could not imagine the journey without it. Thank you for creating a phenomenal resource.
Seen on WallStreetOasis
Beyond the 400 questions guide, try to understand a deeper level and the underlying concepts of the questions being asked. Use ibvine, it really helps.
Seen on WallStreetOasis
IB Vine has excellent questions, especially multistep ones. In my experience I've gotten grilled on accretion/dilution, bond math, and merger model questions. IB Vine has great practice for all of those.
User Story
As a nontraditional transfer student who has been rendered unavailable to many resources at my university (Leadership positions at clubs, immediately behind the recruiting cycle, etc.) IB Vine has been an absolute game changer in my IB prep.
Seen on WallStreetOasis
From my experience interviewing FT for IB, it’s not enough to just know the 400 questions anymore (it’s a good starting point) but to look at even more advanced questions. Would recommend IB Vine.
Seen on Twitter
heard all the new kids use IB Vine now. the questions on IB Vine helped me get the concepts down when I had to recruit and make a lot of BB/MM interviews easier than I expected for techs
User Story
Just got off the phone with a kid who interned at a Dallas PE firm. He mentioned that IB Vine helped him secure that internship as well as his Summer Analyst offer, especially since he came from a non-target with no resources.
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