Most assets can be increased as a percentage of sales. For instance, cash can be increased by any amount. However, fi xed assets often must be increased in specifi c amounts because it is impossible, as a practical matter, to buy part of a new plant or machine. In this case a company has a “staircase” or “lumpy” fi xed cost structure. Assume that East Coast Yachts is currently producing at 100 percent of capacity. As a result, to expand production, the company must set up an entirely new line at a cost of $25,000,000. Calculate the new EFN with this assumption. What does this imply about capacity utilization for East Coast Yachts next year? LO.1