Question $4$

$1$ pts

When forecasting pro forma values for fixed assets to use in corporate valuation, which of the following statements is CORRECT?

When fixed assets are added in large, discrete units as a company grows, the assumption of constant ratios is more appropriate than if assets are relatively small and can be added in small increments as sales grow.

For a firm with assets that are in large, indivisible units, it is impossible to have small increases in sales without expanding fixed assets.

Firms whose fixed assets are in large, indivisible units frequently have excess capacity, and this should be accounted for in the financial forecasting process.