Levered DCF For Banks

This problem practices a core FIG valuation concept: why banks are not valued with the standard unlevered DCF framework and how to think instead about cash flows that are available to equity holders. Candidates need to understand the difference between operating cash flow and financing cash flow in a bank, how to set up a forecast period, how terminal value fits into the analysis, and why the cost of equity is the right discount rate. Interviewers ask this because banking businesses have balance sheets that are central to their operations, so a strong answer shows you can adapt valuation logic to the realities of financial institutions.