According to Tobin's q theory of investment, which of the following scenarios is most likely to prompt a firm to invest in new capital?
1
There is a decrease in the overall demand for the firm's products.
2
The firm experiences a significant increase in its cost of capital.
3
There is an increase in the rate of taxation on corporate profits.
4
There is an increase in the market value of the firm's existing assets relative to their replacement cost.