financial decision

Jun 21st, 2015
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Finance deals with the investment, financing and dividend decisions that businesses make as well as the tools and analysis used to make these decisions. The primary goal of finance is to maximize business value while managing the firm's financial risks (Pike and Neale, 2003).

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Finance deals with the investment, financing and dividend decisions that businesses make as well as the tools and analysis used to make these decisions. The primary goal of finance is to maximize business value while managing the firm's financial risks (Pike and Neale, 2003). Although it is in principle different from managerial finance which studies the nature of these three types of decisions of all firms, rather than business alone, the main concepts in the study of finance is applicable to investment, financing and dividend problems of all kinds of firms (Pike and Neale, 2003).Investment decision is the decision to commit the firm's financial and other resources to a particular course of action. Confusingly, the same term is often applied to both real investment, such as buildings and equipment, and financial investment, such as investment in shares and other securities (Ryan, 2007). While the principles underlying investment analysis are basically the same for both types of investment, it is helpful for the firm to concentrate here on the former category, usually referred to as capital investment. The firm particular emphasis on strategic capital projects concentrates on the allocation of a firm's long-term capital resources (David and Richard, 1998). It means that the management must allocate limited resources between competing opportunities or projects in a process known as capital budgeting. The firms making this capital allocation decision requires estimating

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