A textbook for students of corporate finance, capital budgeting, financial management, and financial theory. Blending theory and practice, it describes the practical applications of the modern theory of finance to realistic corporate decisions, made in uncertain environments, with particular reference to the allocation of the firm's long-term capital resources. This revised and updated edition (fourth was 1990) adds a new chapter on short-term working capital management. A substantial revision of a bestseller by two prominent authors, this book focuses on the practical application of the modern theory of finance to realistic corporate decisions, with an emphasis on the allocation of a firm's long-term capital resources. Includes new chapters on short term working capital management and new examples throughout. Offering a unique blend of theory and practice, Capital Investment and Financial Decisions describes the practical application of the modern theory of finance to realistic corporate decisions, made in uncertain environments, with particular reference to the allocation of the firm's long-term capital resources. In the fifth edition: A new chapter on short-term working capital management; real-world examples have been incorporated throughout the textbook to enhance the student's understanding of the material presented as well as increase the student's awareness of the material being discussed; consistent with the current low inflationary environment, inflation has been incorporated in the relevant chapters rather than an entire chapter being devoted to the topic; new problems and mini-cases have been added to every chapter; the relevant changes in the US tax code have been incorporated; the discussion of capital market theory has been updated to reflect current and ongoing research in this area; and boxed articles from the financial media are quoted, emphasizing the relevance of the studied material. Capital Investment and Financial Decisions, Fifth Edition, is for students of corporate finance, capital budgeting, financial management, and financial theory.