Series 79 practice questioneasyFinancial Modeling
In a DCF sensitivity table, which pair of assumptions is most commonly varied?
- ATax rate and share count
- BDepreciation method and audit fee
- CWACC and terminal growth rate✓ Correct answer
- DStock split ratio and dividend date
Explanation
Why C — WACC and terminal growth rate
WACC and terminal growth rate Those two assumptions drive terminal value and present value more than most other inputs in a standard DCF. Sensitivity tables help show valuation ranges instead of a false single-point estimate.
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