This book describes the theory and practice of corporate finance. It's clear why financial managers have to master the practical aspects of their job, but why do practitioners need to bother with theory? Managers learn from experience how to cope with routine problems. But the best managers are also able to respond to change and deal with non-routine situations. To do so you need more than rules of thumb and gut feel; you must understand why companies and financial markets behave the way they do. In other words, you need a theory of finance. That should not sound intimidating. Good theory helps you grasp what is going on in the world around you. It helps you ask the right questions when times change and new problems need to be analyzed. It also tells you which things you do not need to worry about. Throughout this book, we show how managers use financial theory to solve practical problems