WHAT ARE WE DOING HERE?!

FINANCE 850

• value a function of discounted cash flows
• maximization of shareholder wealth
• take all projects with positive net present values
• focus on asset side of a firm's economic balance sheet

FINANCE 851

• focus on the liability side of a firm's economic balance sheet
• we'll look at the claims on firm value and explore if how they're ordered affect firm value
• e.g. Does debt policy affect firm value? If so, how?

GOAL

We want to develop a framework for thinking about issues related to firm financial policy and how it affects firm value. Put another way, we want to understand why financial policy varies in systematic ways across different firms.