A Review of“BUSINESS INVESTMENT POLICY”* A Critical Review GEORGE TERBORGH: Machinery and Allied Products Institute and Council for Technological Advancement, 1200 Eighteenth Street,N.W., Washington,D.C., 1958. 260 pp. $6 (A MAPI Study and Manual)

In my previous article on “Project Justification in a Multi-product Chemical Plant”, which appeared in the Fall 1959 issue of The Engineering Economist, I discussed the underlying causes for equipment acquisition and replacement in the chemical industry, and followed with a presentation of the payout-time technique for evaluating capital expenditure, as designed by a leading dye and pharmaceutical plant. Many other well-known techniques, such as the Annual Cost method, the Discounted Cash Flow, and the MAPI approach, are also available to management. However, none of the techniques mentioned relieves management of the basic responsibility for making the ultimate decisions regarding capital acquisition for expansion or replacement. The methods do present management with an analysis pointing up the relative merits of a given type of investment, and give some indication as to which alternative is the more desirable. Management, nevertheless, must assume responsibility for the final decision.