Jack Is Considering Adding Toys to His General Store

question 388

Multiple Choice

Jack is considering adding toys to his general store. He estimates that the cost of inventory will be $4,200. The remodeling expenses and shelving costs are estimated at $1,500. Toy sales are expected to produce net cash inflows of $1,200, $1,500, $1,600, and $1,750 over the next four years, respectively. Should Jack add toys to his store if he assigns a three-year payback period to this project?

• A) yes; because the payback period is 2.94 years
• B) yes; because the payback period is 2.02 years
• C) yes; because the payback period is 3.80 years
• D) no; because the payback period is 2.02 years
• E) no; because the payback period is 3.80 years

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