acquiring funds in an efficient manner, at the lowest cost, and allocating these funds to investments of the highest possible return commensurate with the goals of the company. The objective of corporate financial management is to maximize the value of the firm. The attainment of this goal is measured by the market value of the firm, computed as stock share price multiplied by the number of shares outstanding. Financial management involves three types of decisions. The investment decision determines the assets to acquire. The financing decision concerns the capital structure of the firm and the degree of financial leverage. The dividend decision affects both the assets of the firm and the financing of the firm and is further important because a firm that reduces its dividend will likely experience a drop in the stock price. Based on the results of these decisions as reflected in the financial statements, a financial manager is able to estimate the expected value and standard deviation of future cash flows. The value of the firm is the present value of future cash flows discounted at a rate of return commensurate with the risk level of the future cash flows. The objective of this book is to show how financial decisions affect the firm and how corporate financial managers can evaluate decisions.

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