Chapter_01 - 1 Introduction To Corporate Finance 1...

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1 1 Introduction To Corporate Finance
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1 1 Introduction To Corporate Finance
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1-3 What is finance? What is finance? Finance is the study of how we allocate our assets over time in a risky world. For an individual, it is the study of how we pay our bills today and invest for the future The overall goal is maximizing our net worth, subject to the lifestyle we want to lead For a corporation, it is the study of how they pay their bills and how they choose to invest in future projects The overall goal is maximizing the stock price of the company
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1-4 Corporate Finance Corporate Finance Some important questions that are answered using corporate finance What long-term investments should the firm take on? (Capital budgeting) Where will we get the long-term financing to pay for the investment? (Capital structure) How will we manage the everyday financial activities of the firm? (Working capital management)
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What long-term investments should the What long-term investments should the firm take on? Examples. firm take on? Examples. For a hotel chain, the decision to build a new property or buy a property from another chain. For an auto manufacturer, the decision to develop a new car or redesign a current car For a record company, the decision of which new band to sign, and whether to fund a new album by an existing band. Evaluating the size, timing and risk of future cash flows is the
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This note was uploaded on 09/09/2008 for the course H ADM 225 taught by Professor Jwellman during the Fall '07 term at Cornell University (Engineering School).

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Chapter_01 - 1 Introduction To Corporate Finance 1...

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