Finance questions,
answered.

At 40 hours a week for 52 weeks, $90,000 a year is $43.27 an hour before taxes. At the same annual pay, 50-hour weeks work out to $34.62, 60-hour weeks to $28.85, and 80-hour weeks to $21.63. The useful comparison is the pay relative to the time the job actually requires.

Keep in mindThis is an effective-pay comparison, not an overtime calculation. Salary alone does not determine overtime eligibility.

Use the money available after taxes and payroll deductions to plan spending. Gross salary helps you compare offers, but it is not the amount available for rent, food, travel, or saving. The usual 50/30/20 guideline divides take-home pay among needs, wants, and saving or debt goals.

Keep in mindA budgeting rule is a starting point. Bay Area housing, family responsibilities, debt, and retirement goals can require a different allocation.

Compare the whole opportunity: pay you can rely on, hours, benefits, manager quality, training, responsibilities, and the opportunities the experience could create. A lower-paying role can be a good investment in your development, but only if the benefits are credible and you can afford the difference.

Keep in mindA prestigious name does not guarantee good training or a promotion. Treat bonuses, equity, and future career moves as uncertain until you understand the terms and evidence.

Start with the loan payment, then add property taxes, insurance, maintenance, utilities, any HOA dues, landscaping, and reserves for major repairs. Keep the down payment and closing costs separate from recurring spending. A mortgage payment alone is not an all-in housing budget.

Keep in mindDo not use the seller's California tax bill as your acquisition forecast. A change in ownership can trigger reassessment. Budget major repairs explicitly and avoid counting landscaping in both maintenance and a separate line.

No. Cap rate compares a property's annual net operating income with its price or value. It does not include your financing, income taxes, capital expenditures, or eventual sale. Cash-on-cash return compares a defined period's cash flow to equity with the equity invested; IRR considers the timing of cash flows over the investment.

Keep in mindA higher equity return produced by debt comes with greater downside exposure. State exactly which cash outflows your return calculation includes.

Net operating income measures property operating revenue less property operating expenses. It generally excludes debt principal and interest, depreciation, income taxes, and capital expenditures. You still need to pay the applicable cash costs before determining what can be distributed to investors.

Keep in mindNOI is not a universal GAAP line item. Underwriting conventions, including reserve treatment, can differ. Reconcile the lender's definition with your own.

The Fed directly targets an overnight interest rate. A long-term fixed mortgage is priced in a different market, where expectations about future interest rates, inflation, and economic conditions matter. Treasury and mortgage-backed security yields, lender costs, and loan-specific risks also affect the rate offered to a borrower.

Keep in mindDo not model a Fed cut as an equal reduction in a future mortgage rate. Stress-test refinancing at several rates and loan amounts.

The term tells you when the loan is due. The amortization period determines how scheduled principal payments are spread out. If payments are calculated over 30 years but the loan matures in five years, a substantial balance can still be due at the end of year five.

Keep in mindA low monthly payment can hide a large balloon. Model the maturity balance, not just this year's debt service.

Yes. A new lender may support a smaller loan because property income or value has fallen, underwriting standards have tightened, or another lending limit is binding. A lower interest rate helps debt service but does not automatically replace all the debt coming due.

Keep in mindUnderwrite the new loan amount and the maturity payment separately. 'We will refinance' is an assumption that needs support.

DSCR compares operating income with debt service. LTV compares the loan with the property's value. Debt yield compares operating income with the loan amount. They answer different questions, so a lender can require all three and size the loan to the tightest limit.

Keep in mindThere is no single minimum DSCR or debt yield that applies to every lender, property, and market.

No. Occupancy is only one input. A long lease at below-market rent, expensive landlord obligations, weak tenant credit, or restrictive renewal rights can limit value. Vacancy has its own costs and risks, including downtime, leasing commissions, tenant improvements, and uncertainty about future rent.

Keep in mindDo not replace current contractual rent with market rent before the lease allows it.

No. A cap rate relates one year's NOI to value. A discount rate converts a sequence of future cash flows into present value. Growth, timing, capital spending, and sale assumptions help explain why the two rates differ.

Keep in mindDo not use a cap rate to discount every year's cash flow simply because both inputs are percentages.

Profit and cash move on different schedules. Revenue may be recorded before customers pay, inventory may be purchased before it is sold, and equipment can require cash well before its cost appears in earnings. Debt repayments also use cash without being operating expenses.

Keep in mindEBITDA is not cash available to spend. It leaves out taxes, capital expenditure, working-capital investment, and financing cash flows.

Use free cash flow to the firm to value operating cash flows available to debt and equity providers, before debt financing cash flows. Discount FCFF at an appropriate WACC. Free cash flow to equity includes the effects of debt financing and is discounted at the cost of equity.

Keep in mindMatch the cash flow with the discount rate. After valuing operations, bridge to equity by addressing cash, debt, and other relevant non-operating assets or claims.

It is the agreed target amount of operating working capital that the seller is expected to deliver at closing. The purchase agreement defines the included accounts, accounting methods, and price-adjustment mechanism. The goal is to deliver the business with the agreed level of working capital needed to operate.

Keep in mindThis 'peg' is unrelated to the P/E-to-growth, or PEG, valuation ratio. Cash, debt, deferred revenue, and other balances are not automatically treated the same way in every deal.

No. Annual recurring revenue is an annualized operating metric for qualifying recurring business. It is not automatically GAAP revenue, cash collected, or profit. Define which contracts, discounts, usage, and churn assumptions are included before comparing companies.

Keep in mindARR and IRR are unrelated. ARR describes recurring business activity; IRR measures an investment's return based on its cash flows.

No. Growth creates value when the expected return on the additional investment exceeds its cost of capital. Revenue can grow while the company consumes cash and destroys economic value.

Keep in mindHigh growth is not a substitute for attractive unit economics, a credible path to returns, or enough funding to reach the next milestone.

No. A SAFE provides rights to future equity under its terms. Delaying the issue of shares does not remove the economic dilution. Model the SAFE, other convertible securities, the option pool, and the next financing together.

Keep in mindA standard YC SAFE is not a convertible note: it has no interest or maturity date. Terms and legal forms vary; use the actual documents.

For steady spending, divide available cash by monthly net cash burn. For a changing business, build a month-by-month cash forecast. Hiring, collections, capital spending, restricted cash, and debt payments can make a simple average misleading.

Keep in mindAn expected funding round is not cash until it closes. A company can be growing quickly and still run out of money before reaching sustainability.

No. Additional users may cost less to serve than in some physical businesses, but hosting, inference, support, security, payment processing, sales, and engineering still matter. AI usage can create substantial variable costs.

Keep in mindFounder time is not economically free. Time saved for a customer also does not automatically become cash saved unless spending or revenue changes.

A target is what you want to achieve. A forecast is your best current estimate of what will happen. An actual result is what happened. Keeping them separate makes it possible to learn from performance rather than rewriting the plan to match reality.

Keep in mindA management target is not independent evidence that the revenue will occur.

A credible model connects the business to cash flows and makes uncertainty visible. Distinguish verified facts, management claims, your assumptions, and the judgment behind your recommendation. Each important input should have a source or an explicit rationale.

Keep in mindA polished spreadsheet, confident presentation, or AI-generated citation does not establish that an assumption is true. Read the underlying source and confirm what it measures.

No. Required return is the compensation an investor demands for taking risk. Expected return is the outcome estimated before investing. Realized return is what actually happens. Some risks offer too little expected reward to be worth taking.

Keep in mindThe biggest possible upside is not the same as the best decision. Consider liquidity, concentration, contractual obligations, and the ability to change course.

State the decision, explain the evidence, show the economics, identify what could go wrong, and say what would change your mind. Compare serious alternatives before selecting one. The audience should be able to follow the reasoning without relying on your confidence alone.

Keep in mindEvery number on a slide should be something you can explain. Spend time stress-testing the analysis and practicing questions, not just adding slides.