You Work For A Large Mineral Exploration Company And Propose Buying New Stateoftheart Equipment The Equipment

Question

You work for a large mineral exploration company and propose buying new state-of-the-art equipment. The equipment

is expensive and so is training employees to use it, but it will increase the yield of exploration activities in the future. The CEO of the company says that because your plan has high current costs it will depress the stock market value of the company. Does an investment that lowers current profit but increases future profit necessarily lower current stock prices? Explain briefly.

An investment that lowers current profit but increases future profit:

Economics