BNSF is the largest freight railway network in North America. The company, privately owned by parent company Berkshire Hathaway, just announced last week that the company expects to spend about $3.4 billion (yes, billion!) on capital investments (i.e., long-term, high dollar projects) in 2020. Most of this will be spent on upgrading and replacing existing rails and only about 20% on expansion projects.

Think in terms of our Chapter 5 time value of money concepts: Present value, future value, and the discount rate (which includes a risk factor). Discuss what kind of process executives and capital budgeting managers may go through to justify $3.4 billion in capital investments. Thinking of that amount as a present value that will be spent in 2020, what might justify the expenditures today? You do NOT have to research BNSF for this assignment. GIve one or two paragraphs on the process. Do not overthink this.