Question: Sometimes capital investments with a positive net present value
Sometimes capital investments with a positive net present value have a negative impact on earnings. For example, investing in certain types of research and development may result in a large expense at the time of investment with the benefits coming a few years (or more) later. Suppose an executive tells you, “I will not approve any capital investment that decreases current earnings, no matter how high the net present value. If our earnings go down, our stockholders are hurt because stock prices will fall, and our managers will be hurt because their bonuses are tied to earnings.” What is wrong with the executive’s statement?
Relevant QuestionsLefty’s BBQ is a U.S. national restaurant chain which serves beef, pork, and chicken barbecue along with Pepsi products, thin-cut French fries or slaw as sides, and offers biscuits or garlic bread as well. The restaurant ...Independent random samples of 45 and 55 soft drinks are drawn from two soft-drink machines. Sample average content and standard deviation were obtained for both samples. The sample data is presented in the following ...How are organizational information systems related to company strategy? How does strategy affect the information systems a company develops and uses?Actual Patient Revenues 2010 Projected Patient Revenues 2010 Projected Patient Revenues 2011 Jan ............. 1,700,000Feb ............. 1,300,000Mar ............. 1,200,000Jul ............. 1,400,000Aug ...a. In international marketing of your products, you have a choice between standardizing and customizing of the products. Explain the difference of these two strategies and your recommendation.b. What are the major issues in ...
Post your question