Question Description
I’m studying for my Accounting class and need an explanation.
Arar Corporation’s controller, Abdulrahman, was asked to prepare a capital investment analysis for a robot-guided aluminum window machine. This machine would automate the entire window-casing manufacturing line. Abdulrahman has just returned from an international seminar on qualitative inputs into the capital investment decision and the value chain. He is eager to incorporate these new ideas into the analysis. In addition to the normal net present value analysis (which produced a significant negative result), Abdulrahman factored in figures for customer satisfaction, scrap reduction, reduced inventory needs, and reputation for quality.
With the additional information included, the analysis produced a positive result for the investment. Do you think these other factors should be included in Abdulrahman’s analysis? Elaborate on why or why not.
Explanation & Answer
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Running Head: CAPITAL INVESTMENTS
Capital Investments
Institutional Affiliation
Name
Date
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CAPITAL INVESTMENTS
Capital Investments
Capital investments refer to investments in terms of money that a company can use to
further its business objectives. It is important to note that for organizations to achieve their goals
and objectives, they need to invest. This is because investments usually pay off in terms of returns
(Lerner et al. 2014).
The returns can be cat...
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