A Firm Projects a Small Increase in Sales, but Still

A firm projects a small increase in sales, but still requires a significant increase in plant and equipment. Which of the following is a reason for such a large financial commitment?

A) Decrease in economies of scale
B) Increase in fixed operating costs
C) Decrease in financing feedbacks
D) Increase in lumpy assets
E) Decrease in spontaneously generated funds

Correct Answer:

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