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Investment Instability

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The Bureau of Economic Analysis provided data for real private nonresidential fixed investment in table form at www.bea.gov. Access the BEA interactively and select National Income and Product Account Tables. Find Table 5.4 "Private Fixed Investment by Type." Has recent real private nonresidential fixed investment been volatile (as measured by percentage change from previous quarters)? Which is the largest component of this type of investment, (1) structures or (2) equipment and software? Which of these two components has been more volatile? How do recent quarterly percentage changes compare with the previous years' changes? Looking at the investment data, what investment forecast would you make for the forthcoming year?

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Investment Instability--Changes in real private nonresidential fixed investment
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<br> Has recent real private nonresidential fixed investment been volatile (as measured by percentage change from previous quarters)?
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<br>Yes, real private nonresidential fixed investment, as measured as a percentage change from the preceding quarter, has increased only by 5.8% in 2004 Quarter 1, whereas it increased by 10.9% in 2003 Quarter 4 and by 12.8% in 2003 Quarter 3.
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Solution Summary

Changes in real private nonresidential fixed investment are demonstrated.

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Balance Sheet as of December 31, 2005

BALANCE SHEET 05

ASSETS
Cash and ST Investments $11,210 would this be considered income of any sort?
Accounts Receivable $9,000
Inventories ___$750_____
Total Current Assets $20,960
Property, Plant & Equipment $62,500
less Accumulated Depreciation ($11,000)
Net Property, Plant and Equipment $51,500
Prepaid Expenses (Non current) $1,500
Total $73,960

LIABILITIES & SHAREHOLDERS EQUITY
Accounts Payable -Trade $4,100
Accrued Liabilities (expenses) $1,750
Interest Payable $550
Income Taxes Payable $1,250
Dividends Payable $500 Is this per share or total dividends?
Total Current Liabilities $8,150
Long term Debt - A $10,000
Long term Debt - B $7,500
Total Liabilities $25,650
Common Stock at Par $42,500
Retained Earnings $6,310 Would this be considered part of income?
Treasury Stock - at cost ($500) This equals dividends?
Total Shareholders equity $48,310
Total $73,960

Key Financial Data for Company

Income Statement of Company
Income for the year ending December 31, 2005

INCOME STATEMENT 05

Net Revenues $50,000
Total Revenues $50,000
COGS (not including depreciation) ($25,000)
Gross Profits $25,000
SG&A ($10,000)
Depreciation Expense ($6,500)
Total Operating Expenses ($16,500)
Income Before Interest & Taxes $8,500
Interest Expense ($1,500)
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Income Tax Expense ($2,800)
Net Income $4,200
Beginning RE $2,700
Dividends ($590)
Ending RE $6,310

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