Read the following passage carefully and answer the questions given below.

'Laxmi Enterprise' is a textile manufacturing firm. It has been consistently earning good profits for many years. This year, too, it has been able to generate enough profits. There is availability of enough cash in the company and good prospects for growth in the future. Now they wished to diversify their business. The CEO of Laxmi Enterprise is considering two options, either to diversify into manufacturing cosmetics or switches. So they wanted to purchase land, to set up a manufacturing unit in the backward area of Assam, which would lead to the generation of employment opportunities in the area, but only after fulfilling all legal requirements and taking appropriate steps to ensure that the environment was not polluted. The finance manager of the company, Mr. Vikrant was asked by the management to prepare a report on the factors that should be considered while making their decisions.

Identify the incorrect statement related to the decision of investing in a land by the company, from the options given below:

These decisions are reversible.

The correct answer is Option (3) → These decisions are reversible.

• These decisions have a bearing on the long-term growth. → Correct, because setting up a new unit and diversifying into a new line (cosmetics or switches) will affect the company’s long-term growth trajectory.

• These decisions influence the overall business risk complexion of the firm. → Correct, since diversification and investment in a new area changes the risk profile of the company.

• These decisions are reversible. → Incorrect, because once large investments are made in land, plant, and equipment, they cannot be easily reversed without heavy losses.

• These decisions result in a substantial portion of capital funds being blocked in long-term project. → Correct, as land purchase and factory setup tie up significant capital.