Decision Making and Capital Budgeting

The President of EEC recently called a meeting to announce that one of the firm’s largest suppliers of component parts has approached EEC about a possible purchase of the supplier. The President has requested that you and your staff analyze the feasibility of acquiring this supplier. Discuss the following:

What information is needed to analyze this investment opportunity?
What will be your decision-making process?
All future costs are relevant in decision making. Do you agree? Why?
Capital budgeting decisions fall into 2 broad categories: screening decisions and preference decisions. Discuss this.
Which do you think EEC should use—screening decisions or preference decisions? Why? 750-1,000 words not including Title Page and Reference Page

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Decision Making and Capital Budgeting
Investment decisions require a combination of strategies to determine the feasibility of long-term business investments. This process therefore requires managers to forecast the future with regards to the revenue that the new investment will generate. Capital budgeting decisions also require the firm to make investment decisions after consideration of the past expenses to determine their ability to make profit. This paper is concerned with whether EEC Company should purchase the supplier or not.

(936 words)