The second column of Table 1.1 shows an important recent investment decision for each corporation.
These investment decisions are often referred to as capital budgeting or capital
expenditure ( CAPEX) decisions, because most large corporations prepare an annual capital
budget listing the major projects approved for investment. Some of the investments in
Table 1.1 , such as Walmart’s new stores or Union Pacific’s new locomotives, involve the purchase
of tangible assets—assets that you can touch and kick. However, corporations also need
to invest in intangible assets, such as research and development (R&D), advertising, and marketing.
For example, GlaxoSmithKline and other major pharmaceutical companies invest billions
every year on R&D for new drugs. Similarly, consumer goods companies such as Procter
& Gamble invest huge sums in advertising and marketing their products. These outlays are
investments because they build brand recognition and reputation for the long run.