For startup firms, some products are under development for years before they generate earnings. The upfront costs often exceed a firm's ability to fund these activities on its own. Which of the following reasons that motivate firms to seek funding or financing is illustrated in this example?
A) cash flow challenges
B) marketing costs
C) capital investments
D) personnel costs
E) lengthy product development cycles

Question

Quizplus · Accepted Answer

Lengthy product development cycles require a significant amount of upfront investment, which new companies may not have the resources to fund on their own. As a result, they may seek funding or financing to cover these costs until the product generates earnings.

For Startup Firms, Some Products Are Under Development for Years