Business Finance - Chapter 1

Business Finance - Chapter 1 - Chapter 1: Business Finance...

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Chapter 1: Business Finance I 1.1: Investment and Financing Decisions Making good investment and financing decisions is the chief task of the financial manager. Investment Decision or Capital Budgeting Decision- Decision to invest in tangible or intangible assets. o The financial manager has to help the firm identify promising projects and decide how much to invest in each project. Financing Decision- The second main task of a financial manager. It is to raise the money that the firm needs for its investments and operations. o They usually get this money from investors in exchange for a share or future profit. Capital Structure- The mix of long-term debt and equity financing. o Here “capital” refers to the firm’s long-term financing is said to be “raising capital”. How money flows from investors to the firm and back to investors again: o The flow starts when cash is raised from investors. o
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This note was uploaded on 10/22/2008 for the course ECON 351 taught by Professor Westbrook during the Fall '08 term at Rutgers.

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Business Finance - Chapter 1 - Chapter 1: Business Finance...

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