The CEO of a transportation company wants to use a large amount of cash for the purchase of additional new trucks and trailers rather than paying bonuses to its employees. The new trucks are more productive than the existing trucks or used trucks. The used trucks have a lower price than the new ones but the new ones have less yearly depreciation because of their longer useful period. Considering that the company president's goal is the long term success of the company, would this normally be a wise decision?

Answer 1

Yes --

But, I'd suggest he adopt a compromise by paying some of this cash in employee bonuses and buying fewer new trucks.

A truck can only be as efficient as its driver.