Financial Modelling - Access Analytic

Welcome to your free Financial Modelling Test

1.

In financial modelling, what is the WACC used for?

It is used to calculate the IRR

It is used to calculate whether a project's return exceeds the cost of capital

It is used to calculate whether a project's return exceeds the IRR

It is used to calculate whether a project's cash flows exceed the NPV

2.

If you perform a discounted cash flow analysis for a project and determine that there is a positive NPV, what does this mean?

The project's rate of return exceeds the discount rate used

There must only be one IRR solution

The project's rate of return is less than the IRR

The project's rate of return exceeds the hurdle rate

3.

What would be the IRR for this series of cash flows:

Year 0: $600

Year 1: $200

Year 2: $500

Year 3: $400

There is more than one IRR solution

The IRR will be negative

The IRR will be infinite

There is a single IRR of about 33%

4.

For a mining project that has a limited lifespan, at the end of the project we should:

Use the final year cash flows to estimate the ongoing future cash flows to calculate a terminal value

Estimate the construction cost of the next mining phase

Assume an ongoing revenue stream then discount this back to today

Estimate the rehabilitation costs then discount these back to today

5.

The best way to provide multiple scenarios in a financial model is:

Use data tables to run different sets of inputs through the model at the same time

Use pivot tables to show the results of different inputs running through the model at the same time

Save multiple versions of the file then use linked workbooks to compare the results

Create multiple sheets within one file that have different inputs and calculations, then use a summary sheet to compare the results

6.

If you create your financial model in months then want to consolidate the calculations to quarters and/or years, the simplest and most efficient formula to use for income and expense items would be:

INDEX/MATCH

VLOOKUP

SUMIFS

INDIRECT

7.

You are considering a new project and an analyst has produced the chart below for you. If your company's WACC is 8%, what would be your recommendation?

Decline the project as the it is showing a negative NPV and there are large downside risks

The project should be declined as the IRR is negative

The project has a small positive NPV using the WACC. Only proceed with this project if the downside risks can be managed and there are no better alternatives.

The project's IRR is less than the WACC so it should be accepted

8.

Which of the following statements is true regarding the series of cash flows below?

There could be more than one IRR solution

The NPV must be positive

There is no IRR solution

The NPV must be negative

9.

An analyst has produced the following chart from their financial model (NPAT = net profit after tax). What is the best analysis of this chart?

The project takes 6 years to reach profitability but after that, the project looks great so we should recommend it for approval.

The project takes too long to reach profitability so should be declined.

The forecast profits from 2025 onwards appear to unusually high. Could there be some missing expenses?

It cannot be analysed properly without seeing the NPV and IRR.

10.

The chart below relates to an oil & gas project. What can you conclude from looking at this chart?
(OPEX = operating expenditure, CAPEX = capital expenditure, Government take = tax paid/refunded)

The project's payback time is approximately 6 years

The project's return exceeds the company's WACC

The project requires significant additional capital expenditure in 2024 to compensate for declining oil production

All of the above

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