In the JC Crawford example, capital expenditures (CAPEX) are estimated using projected balances for net property, plant, equipment (net PPE), which is determined by the firms projected sales. In 2016, the estimated ending balance or net PPE is projected to be $440,000, which represents an increase of $40,000 over the ending balance for 2015. However, CAPEX for 2016 is estimated to be $80,000.

Why is the change in net PPE not equal to CAPEX? (hint: consider the effect of annual depreciation expense on net PPE).