1. Using 3, 5, 7 and 9 each exactly once and any basic operations, get to 30.
Check the worked answer
(9 - 7) x 5 x 3 = 30.
Home › Free drills › J.P. Morgan
Free firm drill
J.P. Morgan Investment Banking Interview Questions
10 past firm prompts. Answer out loud, then open the worked answer. No signup.
Recorded roundTechnical topicsWorked answers
Start the drillGet the full workbookPractice
Round labels come from the workbook source. They describe these prompts, not a fixed interview script.
2. If a company with a P/E of 10x acquires a company with a P/E of 5x in an all-stock deal, is it accretive or dilutive?
Check the worked answer
Accretive (10x > 5x).
3. If your depreciation expense goes up by $1,000, explain how this flows through the three financial statements (assume 25% tax).
Check the worked answer
IS: operating income -1,000, taxes -250, NI -$750. CFS: NI -750 + depreciation 1,000 -> cash +$250. BS: cash +250, PP&E (accumulated depreciation) -1,000 -> assets -750; retained earnings -750 -> balances.
4. If EBITDA and EBITDA multiples don't increase over 5 years, does a financial sponsor make money?
Check the worked answer
Yes, potentially - through debt paydown with free cash flow (equity value rises as net debt falls), dividends or dividend recaps during the hold, and cash accumulation. Returns would be modest and could be wiped out by fees/interest if FCF is weak.
5. Is EBITDA always the best metric to use for multiples? What are the other options?
Check the worked answer
No. EBITDA ignores capex, working capital, taxes and lease costs and can be inflated by adjustments. Alternatives: EV/EBIT or EV/(EBITDA - capex) for capital-intensive businesses, EV/EBITDAR for lease-heavy retailers/airlines, P/E and P/BV for banks/insurers, P/FFO/AFFO for REITs, EV/EBITDAX for E&P, EV/Revenue or EV/ARR for unprofitable/high-growth companies, EV/FCF or FCF yield for mature cash generators, industry metrics (EV/subscriber, EV/reserves).
6. If a company is trading at $30/share, under what circumstances would an acquirer pay $40/share in an acquisition?
Check the worked answer
A ~33% premium is justified when: control premium (ability to direct strategy, cash flows); synergies whose PV exceeds the premium; a competitive auction with multiple bidders; the buyer believes the target is undervalued (depressed share price, strong future growth); strategic scarcity of assets/defensive rationale (keep a competitor from buying it); tax benefits/NOLs; cheap buyer financing or an overvalued buyer stock currency; or the board rejected lower offers and requires a premium.
7. If the Fed lowers/raises interest rates, how would the stock market be affected?
Check the worked answer
Cuts generally support stocks: lower discount rates raise the PV of future cash flows (especially long-duration growth stocks), borrowing costs fall, consumer/corporate spending improves and bonds become less attractive relative to equities. Hikes do the opposite. Nuance: markets move on expectations vs. what is priced in, and why the Fed cuts matters - cuts in response to a recession can coincide with falling stocks as earnings drop. Sector effects: financials (net interest margins), REITs/utilities (rate-sensitive), small caps (floating-rate debt).
8. You drive a taxi to JFK from the office. After dropping off your passenger you can: (1) wait at the airport up to 30 minutes for a guaranteed passenger back to the city for a flat $50, or (2) drive back to the city empty and find a rider there. Which do you pick and why?
Check the worked answer
Compare expected revenue per hour and costs. Option 1: worst case 30 min wait + ~60 min ride = 1.5 hours for $50 (~$33/hr) with no empty-mile fuel/tolls, and possibly faster pickup. Option 2: ~45-60 min driving empty (fuel, tolls, zero revenue), then city fares - you'd need to earn more than $50 in the remaining ~30-45 minutes to beat Option 1, which is unlikely unless surge pricing or very high city demand. Choose Option 1 in most cases; choose Option 2 only if city demand is exceptionally high at that time or the airport queue is much longer than 30 minutes.
9. Why do you add back minority interest (NCI) in enterprise value?
Check the worked answer
Noncontrolling (minority) interest is the portion of a subsidiary not owned by the parent when the parent owns more than 50% and consolidates it. Because 100% of the sub's revenue/EBITDA is consolidated into the parent's financials, you add NCI to Enterprise Value so the numerator (EV) and denominator (EBITDA) are consistent. NCI appears in the equity section of the balance sheet, and the NCI share of net income is subtracted to get net income attributable to parent. (Equity investments <50% are the opposite: subtracted from EV because their EBITDA is not consolidated.)
10. What is unlevered free cash flow, which do you use in a DCF and why?
Check the worked answer
Unlevered FCF = EBIT x (1 - Tax Rate) [= NOPAT] + D&A (and other non-cash charges like SBC, if you choose) - Capital Expenditures - Increase in Net Working Capital. Starting from EBITDA: EBITDA - Taxes on EBIT - CapEx - Increase in NWC. Starting from Revenue: Revenue - COGS - OpEx = EBIT; tax-effect it; add back D&A; subtract CapEx and the change in NWC. It excludes interest (cash flow to all capital providers). Use UFCF in a standard DCF because it is independent of capital structure, so discounting at WACC gives enterprise value that can be compared across companies with different leverage; LFCF would be discounted at cost of equity for equity value.
Keep going
Use the full editable workbook
The paid file is mapped by recorded round and topic. Filter it, hide the guidance, mark gaps, and keep your copy.
Buy on GumroadSee the full scopeIndependent interview practice, not official firm material. Interview processes vary by office, group, role, and cycle.