CHAPTER 1 1 1 INTRODUCTION TO CORPORATE FINANCE

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CHAPTER 1 1 -1 INTRODUCTION TO CORPORATE FINANCE Brealey, Myers, and Allen Principles of

CHAPTER 1 1 -1 INTRODUCTION TO CORPORATE FINANCE Brealey, Myers, and Allen Principles of Corporate Finance 12 th Edition Slides by Matthew Will Copyright © 2017 Mc. Graw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of Mc. Graw-Hill Education.

Topics Covered 1 -2 • Corporate Investment and Financing Decisions • The Financial Goal

Topics Covered 1 -2 • Corporate Investment and Financing Decisions • The Financial Goal of the Corporation • Preview of Coming Attractions Copyright © 2017 Mc. Graw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of Mc. Graw-Hill Education.

Corporate Investment and Financing Decisions 1 -3 • Real assets o Assets used to

Corporate Investment and Financing Decisions 1 -3 • Real assets o Assets used to produce goods and services. • Financial assets o Financial claims to the income generated by the firm’s real assets. Copyright © 2017 Mc. Graw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of Mc. Graw-Hill Education.

Corporate Investment and Financing Decisions 1 -4 • Investment decision o Purchase of real

Corporate Investment and Financing Decisions 1 -4 • Investment decision o Purchase of real assets • Financing decision o Sale of financial assets • Capital structure o Choice between debt and equity financing Copyright © 2017 Mc. Graw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of Mc. Graw-Hill Education.

Corporate Investment and Financing Decisions 1 -5 • Capital budgeting decision o Decision to

Corporate Investment and Financing Decisions 1 -5 • Capital budgeting decision o Decision to invest in tangible or intangible assets o Also called the investment decision o Also called capital expenditures or (CAPEX) Copyright © 2017 Mc. Graw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of Mc. Graw-Hill Education.

Corporate Investment and Financing Decisions 1 -6 Capital Budgeting Tangible Assets Intangible Assets Expand

Corporate Investment and Financing Decisions 1 -6 Capital Budgeting Tangible Assets Intangible Assets Expand Stores New Drug R&D @ $800 million Copyright © 2017 Mc. Graw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of Mc. Graw-Hill Education.

Corporate Investment and Financing Decisions 1 -7 Firm Assets Investment Decision Debt Equity Financing

Corporate Investment and Financing Decisions 1 -7 Firm Assets Investment Decision Debt Equity Financing Decision

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