Imagine you are a representative of management at Amazon Inc., and you must make a capital budgeting decision.
The decision is to implement a new computer network system to decrease the time between customer order and delivery. The cost will be 10% of last year’s profits. You are charged with describing the important considerations in the decision-making process to upper management.
In your response, be sure to include the following:
1) A description of the important factors, in addition to quantitative factors, that were considered when making this capital budgeting decision.
2) An explanation of how these factors are significant to the Amazon company.
3) A summary of how you will determine the criteria to rank capital budgeting decisions and whether some criteria are more important than others.
4) A calculation of the proposed return on investment based on criteria you select and justification for that ROI.