August 22, 2013
Chapter 12 – Capital Budgeting
Sample Responses to Discussion Questions
1) The announced spin-off of the pharmaceutical portion of Abbott’s business is meant to reduce risk
for investors. What other benefits might be realized?
2) Abbott invests heavily in capital. How might this be affected with the spin-off and what changes do
you predict?
3) In addition to a sharp increase in capital expenditures from 2010 to 2011, we notice a similar sharp
increase in R&D. Are these two occurrences random or linked?
4) Despite the fact that a capital investment limit is established for a fiscal year, capital investment
considerations can expand well beyond one year. What is driving this lengthier period of time?