On learning that you have decided to invest in equipment and machinery, the head of the Finance Department for the Baltonia operations indicates that all of the company's facilities have passed government inspection. He therefore claims that there is no need to invest in new machinery.

In suggesting this, what is he assuming?

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The government inspectors have been fair and professional in their work.

The rate at which the existing machinery depreciates is quite low.

The employees do not have the technical know$-$how to operate the latest equipment available.