Some companies spend millions of dollars each year on employee training. The cost of this training is treated as an accounting expense, but it may really be an investment. Why might training be an investment?
Many years ago, W. R. Grace was a steamship company operating passenger liners between the West Coast and Hawaii. Now it is a specialty chemical and energy products manufacturer. Why do you think W. R. Grace made such an abrupt change in its line of business? If you had been a shareholder of W. R.
Grace, would you have welcomed the change?
3. What is the minimum rate of return that an investment should provide in order to be acceptable to the company’s investors? Why?