Investment Banking Mock Interview Questions

Mock Interview Questions:

1. Please walk me through your resume.

2. Why business school?

3. What is your preference on location?

4. Can you discuss a time when you had to sacrifice your time for the sake of a project?

5. Can you describe a situation where a time did not work as intended? Whose fault was it?

6. What are your three weaknesses?

7. Do you work better as a leader or a follower?

8. How does $10 increase in depreciation flow through the 3 statements?

- Pretax income down $10, NI down $6

- Cash flow up $4

- Cash up $4, PPE down $10, RE down $6

9. (if 8 too easy) How do you account for a PIK security? $100mm, 10% PIK, t=40%

- Int Expense up $10, NI down $6

- Cash flow down $6, add back $10, cash up $4

- Cash up $4, Int Payable up $10, RE down $6

10. What happens with a $100 write down

-$100 down on pre-tax, NI down $60

-NI down $60, add back $100, CFO up $40

-Cash up $40, asset down $100, RE down $60

10. What is a DTA/DTL and how do they arise?

-arise from temporary difference btwn pre-tax financial income and taxable income (timing issue)

- advance accounting loss gives DTA

-delay accounting loss gives DTL

10. Why would you use cash versus stock in an acquisition?

-Cash taxed at higher rate than l-t capital gains

- if acquired and believe company will be industry leader

-volatility of stock market can make valuations crazy

11. What are 4 ways to value a company (DCF, Comps, Precedent ,LBO) and how to they rank in order of value?

- LBO, Comps, Precedent Transaction and DCF at the higher end

12. Please walk me through a DCF

-WACC (get ke from CAPM, then WACC)

-Select forecast period

- Project unlevered FCF (EBIT*(1-t) +D/A – CAPEX – NWC or Net Income + D/A –Capex –NWC +Int Expense (1-t)

-Discount FCF using WACC

-Calculate TV using exit multiple or perp growth

-Derive Enterprise Value

-Equity Value (subtract debt, etc.); use TSM

-Create range of values by toggling inputs

13. Why do you need to...