The product life-cycle concept from microeconomics and marketing provides useful insights into the relations between cash flows from operating, investing, and financing activities.When a product matures,
A)operations generate positive cash flow, enough to finance expenditures on property, plant, and equipment.
B)firms use the excess cash flow to repay borrowing from the introduction and growth phases and to begin paying dividends to shareholders.
C)capital expenditures usually maintain, rather than increase, productive capacity.
D)all of the above
E)none of the above

Question

Quizplus · Accepted Answer

When a product matures, operations typically generate positive cash flow, which is enough to finance expenditures on property, plant, and equipment. Firms use the excess cash flow to repay borrowing from the introduction and growth phases and to begin paying dividends to shareholders. Furthermore, capital expenditures usually maintain rather than increase productive capacity. All of these are true statements, making D the correct choice.

The Product Life-Cycle Concept from Microeconomics and Marketing Provides Useful