By lowering interest rates, the government lowers the threshold of expected return for capital investments, thus making more investments economically viable. However, such supply side initiatives are weighed by firms against the potential income. If the economic outlook - that is to say the expected demand - is poor, such that the expected return will still not exceed the cost, then the investment will not be undertaken.
In speaking with a local FedEx station manager, investment decisions are typically made at head office in Memphis. The decisions are based on expectations of future demand. Most capacity decisions at FedEx involve land and building acquisitions (new stations) or airplane leases. Thus, they are typically made on the basis of long-term demand projections. These relate to specific measures such as long-term economic growth of the region, population growth of the region and other long-term macroeconomic indicators.
The timing of decisions, however, can relate to the short-term economic situation, including the cost of capital. The company may delay investment to preserve profits during times of poor economic performance. This is because of the close correlation between the state of the economy and the firm's revenues. Moreover, the company seeks to time the completion of capital projects with the point in time when that capacity will be needed. Therefore, an economic slowdown pushes back the time when the capacity will be needed, justifying a delay in the investment expenditure.
These reasons are similar to what has been discussed...
9% for the past seven years (Index Mundi, 2009). An inflation rate of 2% per annum shall be assumed for our future cash flows model, the additional 0.1% reflecting a desire for conservativeness in our estimates. Karl's pension pays him 80% of his current salary, which is not expected to increase in the final three years. The pension benefit is indexed to inflation. We will assume a 30% tax rate for
Harley-Davidson Retail Sales and Deliveries Source: Seeking Alpha (2007) Over the past four years, account receivable growth has outpaced sales and the result is there is more inventory on dealer's lot than at any time in the history of HOG. The analysis states: "If the additional dealer inventory build was taken out of Harley's EPS from the previous two years and shipments evenly distributed throughout the quarters then Harley would have reported
74). This dearth of information was likely caused by a reluctance to examine investment decisions on the part of investors themselves; nobody likes finding out that their "thought-out" considerations are not any more accurate than gut choices, and in fact, those gut choices likely had more influence than all of their mental work. In the last decade, however, strides have been made in the study and analysis of investment behavior, revealing
Right Food Company This report is based on the study carried out on The Right Food Company, based in Australia. The paper studies and analyses the company's entry strategy into Guangzhou, China. I have prepared this report as part of the company's expansion plan into the Chinese market. Company Profile The Right Food Company Industry Packed Food Private Founded New South Wales Headquarters Murwillumbah (NSW) Founder Anni Brownjohn Areas served countries Manufacturing Tweed Valley (NSW) Products Maxinne Lynch (Accounts) Organic, low allergy food developer and manufacturer Key people Eleni Nott (Brand
Product Placement in Console Games A growing body of research confirms that one of the best ways to reach male consumers aged 18 to 34 years is to place products in console games. Originally, game developers paid advertisers to include their products in games to lend them authenticity and realism, but advertisers are now paying game developers to have their products placed in popular console games. The introduction of online gaming
This also implies inadequacies in fiscal sustainability, which influences investments in private sectors. The second channel happens through the level, composition and quality involved within the public investment, which shows the level at which the public investment replaces the private investments (Schmidt- Hebbel, Serven, & Solimano, 1996). The final channel regards the level of taxation on the corporate earnings and the rules applicable in depreciations. There have been arguments that fiscal policy
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