How to measure the value of a capital budgeting project based on financial measures or formulas. However, certain projects can have significant impacts on a company, both positive and negative, that can't be quantified using a formula.
Your firm is considering closing a plant that employs 5,000 people in a small town of 20,000 people in central Florida. The company will relocate the plant to a metropolitan city of with more than 1 million people. What are some of the positive and negative impacts of this capital budgeting decision? What can the firm do mitigate some of the negative impacts?
For example, one negative impact would be the loss of income to 25% of the people in the small Florida town.