• Do not mix annual rate with monthly periods.
• If compounding is monthly, convert both the rate and the number of periods.
• Read carefully whether the question is asking for the amount at the future date or the amount needed today.
• For payoff questions, often you first find how much one account becomes, then subtract from the target.
• Excel sign convention can make answers negative if cash-in and cash-out signs are inconsistent.
• Before using an Excel function, decide whether the unknown is FV, PV, RATE, or NPER.
• For many exam-style answers, use ABS(...) so the final answer shows as a positive number after Excel gives a signed cash-flow result.
• Common pattern: if money today is an outflow, enter it as negative; if the future amount is what you receive, let that side be positive.
• For NPV, remember Excel discounts only the future cash flows. Add the initial cash flow separately.
• If you want a quick check, use the Chapter 5 calculators after you set up the problem type correctly.

Hidden idea: the balance sheet is a snapshot at one date. It must balance every time.

Hidden idea: the income statement is for a period of time, not for one date.

Hidden idea: many questions are really testing whether you know the signs of the changes.

• For ROE, use total equity, not total assets.
• For ROA, use total assets, not equity.
• Do not confuse net income with cash flow.
• A decrease in accounts receivable is usually a source of cash.
• An increase in inventory usually uses cash.
• Dividend is not subtracted to get net income; it is used after net income when moving to retained earnings or financing cash flow.
• Before using a ratio, make sure the numerator and denominator come from the correct statement.

• Probabilities must add to 1 or 100%.
• Do not just average returns; use weighted average.
• If market return is given, subtract the risk-free rate to get market risk premium.
• For portfolio return in CAPM style, first compute portfolio beta, then plug into CAPM.
• Keep decimals and percentages consistent during calculation.

This is the same CAPM idea, but the problem gives you enough information to rebuild the line before solving the final answer.

• For semiannual bonds, divide the annual rate by 2 and multiply the years by 2.
• Zero-coupon bond has no coupon payment, but time periods still matter.
• If the bond price is above par, yield is below the coupon rate; if price is below par, yield is above the coupon rate.
• Read carefully whether they ask for the periodic yield or annual yield.
• Keep face value separate from market price.

• The formula uses D1, not D0.
• If D0 is given, first grow it one period to get D1.
• Make sure required return is greater than growth rate in the constant-growth model.
• Dividend yield uses next dividend over current price.
• When they ask for growth, rearrange the return identity carefully.

• Weights should add to 1 or 100%.
• Use after-tax cost of debt, not before-tax cost of debt, in WACC.
• If flotation fee is present, use the net price received for equity.
• Debt cost may come from YTM, not just the coupon rate.
• Do each step separately before combining them.

• Initial outlay is usually at time 0 and should not be placed inside Excel NPV function with later cash flows.
• Payback ignores the time value of money and any cash flows after the payback cutoff.
• NPV uses the discount rate given in the problem; IRR solves for the rate instead.
• For decision questions, connect the sign of NPV or the size of IRR to the rule before choosing the answer.
• For crossover-rate style questions, compare the difference in project cash flows, not each project in isolation.

Even if almost all years are zero, it is still a normal project-decision setup.