Flo Is Considering Three Mutually Exclusive Options for the Additional

question 79

Multiple Choice

Flo is considering three mutually exclusive options for the additional space she plans to add to her specialty women's store.The cost of the expansion will be $148,000.She can use this additional space to add children's clothing, an exclusive gifts department, or a home décor section.She estimates the present value of the cash inflows from these projects are $121,000 for children's clothing, $178,000 for exclusive gifts, and $145,000 for decorator items.Which option(s) , if any, should she accept?

• A)None of these options
• B)Children's clothing only
• C)Exclusive gifts only
• D)Exclusive gifts and decorator items only
• E)All three options

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Definitions:

Lag Strategy

A business approach where the decision to increase capacity is delayed until demand has proven to sustain at a higher level.

Subcontractors

Third-party businesses or individuals hired to perform part of the work that was originally contracted by another company.

New Facilities

Refers to the construction or opening of new physical buildings or infrastructure for business or operational use.

Break-Even

is a financial term indicating the point at which costs or expenses and revenue are equal, resulting in no net loss or gain.