Decision Tree for Finance Problems
Follow the decision tree to find exactly the formula you need. Start by identifying what you're solving for.
| Situation | Formula | Use When |
|---|---|---|
| Future Value | FV = PV × (1+r)n | Growing money forward |
| Present Value | PV = FV ÷ (1+r)n | Discounting money back |
| Annuity PV | PV = PMT × [(1−(1+r)−n)/r] | Loan/lease valuation |
| Growing Perpetuity | PV = D₁ ÷ (r−g) | Stock valuation (DDM) |
| NPV | Σ [CFₜ ÷ (1+r)t] | Project decisions |
| CAPM | Rf + β(Rm−Rf) | Required return |
| WACC | (E/V×Re) + (D/V×Rd×(1−T)) | Discount rate |
| ROE | Net Income ÷ Equity | Profitability |
| DuPont Analysis | Margin × Turnover × Leverage | ROE breakdown |
| Sustainable Growth | g = ROE × Retention Rate | Max growth rate |