Free CPA BAR Business Analysis Practice Questions (2026)

Sample Questions

Question 1 Easy

Which of the following best describes prescriptive analytics?

Solution

B is correct.

Prescriptive analytics goes beyond describing or predicting outcomes; it recommends specific actions to achieve desired results using optimization models, simulations, and decision analysis. It answers the question: what should we do? The four types form a hierarchy: descriptive, diagnostic, predictive, prescriptive.

Question 2 Medium

A pro forma projects total assets of $5,200,000. Management targets a debt-to-equity ratio of 0.60. How much debt and equity should be projected?

Solution

D is correct.

Setting

D = 0.60 E

and

D + E = 5, 200, 000

, so

1.60 E = 5, 200, 000

;

E = 3, 250, 000

;

D = 1, 950, 000

. Check:

\frac{1 , 950 , 000}{3 , 250 , 000} = 0.60

Question 3 Hard

Clearwater Inc. projects FCFs of $2,000,000 per year for 5 years. Terminal growth rate is 3%, WACC is 9%. PV annuity factor (5 yrs, 9%) = 3.8897. (1.09)^5 = 1.5386. What is total enterprise value?

Solution

A is correct.

PV of 5-year FCFs

= 2, 000, 000 \times 3.8897 = 7, 779, 400

. Terminal value at Year 5

= \frac{2 , 000 , 000 \times 1.03}{0.09 - 0.03} = \frac{2 , 060 , 000}{0.06} = 34, 333, 333

. PV of TV

= \frac{34 , 333 , 333}{1.5386} = 22, 315, 000

. Enterprise value:

7, 779, 400 + 22, 315, 000 = $30, 094, 400

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