Oct 08, 2026 by Offer

Nomura "Walk Me Through a DCF" 2027: Step-by-Step

The Nomura walk me through dcf answer in four steps: project unlevered free cash flow, discount it at WACC, add a terminal value for the years beyond the forecast, and bridge enterprise value to equity value. Commonly reported by candidates in Nomura interviews, this is the valuation question you must be able to deliver cold.

What This Question Assesses

This tests whether you grasp valuation logic rather than a memorized formula. The interviewer listens for the why behind each step — why free cash flow, why WACC, why a terminal value — and will drill into whichever step sounds rehearsed rather than understood.

How to Answer: Nomura Walk Me Through DCF

Step 1 — Forecast free cash flow: project unlevered FCF (cash to all investors) over an explicit period, often five years, from revenue, margins, capex, and working capital assumptions.
Step 2 — Discount at WACC: the weighted average cost of capital reflects the risk of those cash flows; discount each year's FCF to the present.
Step 3 — Terminal value: capture all value beyond the forecast with a perpetuity growth or exit multiple method — often the largest component of value.
Step 4 — Bridge to equity: sum discounted cash flows plus terminal value for enterprise value, subtract net debt, divide by shares outstanding.

Example: "I project five years of unlevered free cash flow, discount each year back at WACC, add a terminal value using a perpetuity growth rate, and arrive at enterprise value — then subtract net debt and divide by shares to get value per share."

Common Mistakes on Nomura Walk Me Through DCF

Skipping the terminal value — it often represents most of the value, and omitting it is an instant fail.
Mixing levered cash flows with WACC — match unlevered FCF with WACC, or levered FCF with cost of equity.
Stopping at enterprise value — the question implies equity value per share, so finish the bridge.

Expect follow-ups on every step — WACC components, terminal value methods, the bridge. Master the walkthrough first, then prepare one level deeper on each component.

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FAQ

What goes into WACC?

Cost of equity (often via CAPM) and after-tax cost of debt, weighted by the target capital structure.

Perpetuity growth or exit multiple?

Know both: perpetuity applies a long-run growth rate to final-year FCF; exit multiple applies a market multiple to final-year EBITDA.

Why unlevered free cash flow?

Because it represents cash available to all capital providers, matching a discount rate (WACC) that reflects all capital.

How sensitive is a DCF?

Very — small changes in WACC or terminal growth move value materially, which is why bankers triangulate with market-based methods.

Preparing for Nomura's interview? Our 2027 Nomura Online Assessment and Video Interview Exact Questions has practice questions and answers — $79 one-time, instant download.