After taking a closer look at the numbers and doing the financial analysis, you begin to think more strategically, and in a broader context, you anticipate what the CFO would ask or what the head of Strategic Planning might want to know. You think about some of the key issues:
- Does this project maximize firm value?
- What will be the impact to the stock price?
- How does this capital project fit with the strategic direction of the firm?
In light of this, you decide to email the CFO and VP of Strategic Planning in anticipation of their questions.
Explain how capital projects maximize firm value. Explain how major capital projects can impact a firm's stock market valuation and how they should fit with the strategic direction of the organization.