Question

Pinnacle Manufacturing Incorporated is currently operating. How much in new fixed assets is required _________.

A) to cover operating expenses
B) to maintain existing assets
C) for expansion and growth
D) for debt repayment

Answer 1

In the context of Pinnacle Manufacturing Incorporated, new fixed assets are typically not required for operating expenses or debt repayment but may be needed for maintaining existing assets or for expansion and growth to meet increased consumer demand.

Step-by-step explanation:

When assessing the need for new fixed assets within Pinnacle Manufacturing Incorporated, it's important to clarify the purpose of the investment. The student's question may contain a typo as the sentence is incomplete. However, options A and D, which refer to covering operating expenses and debt repayment respectively, typically do not require new fixed assets. Instead, option B, which involves maintaining existing assets, may necessitate new fixed assets if the current assets are at the end of their useful life or need significant upgrades. Option C, which relates to expansion and growth, is the most likely scenario where a company would seek new fixed assets. Investments in new equipment and facilities are a strategy used during economic expansion when consumer demand is high and companies anticipate increased profits. As illustrated in past economic behavior, even during a slow economy, such as in 2009, companies heavily invested with the expectation of future profit generation.