The attached article entitled, “Equipment Expenditures since 1995: The Boom and Bust,” addresses economic considerations related to investment by firms. Once you have read this article, answer the following questions:
1. Did the author’s research show that the recent decline in expenditures was related solely to reduction in technology expenditures?
2. What three factors does the author identify as driving investment by businesses?
3. How will the level of stock prices affect a firm’s investment?
4. Did the author conclude that the recent decline in stock prices was the driving force in investment?
I have attached a partially completed financial/capital budgeting model for your reference. This is the kind of exercise you have already gone through in MGMT 640. Our objective here is to refresh your financial memory. Please attempt to complete the model. I will post the solutions later in the week.
What is the most critical step in the capital budgeting process? Explain