In this paper, we show that economic depreciation decreases value maximizing corporate hurdle rates to encourage both maintenance and growth investments. Economic depreciation without maintenance decreases the upside potential of future growth opportunities upon stochastically improved profitability. Deferred maintenance undertaken upon improved profitability requires scarce corporate resources at the expense of business expansion investments. Managers forestall this loss of growth option value with maintenance investments even with modest current business returns. While economic depreciation encourages both maintenance and growth for existing businesses, it impedes the start of new ventures in the first instance.
Total Reviews: 0
After completion purchase and payment you will get an email with download link of book. You can download this book within 24 hours. Be remember you can't download this book after 24 hours.