Jack Is Considering Adding Toys to His General Store

question 4

Multiple Choice

Jack is considering adding toys to his general store. He estimates that the cost of inventory will be $4,200. The remodeling 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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Definitions:

Igneous Rock

Stone created by magma or lava hardening as it cools.

Viscosity

A measure of a fluid's resistance to flow, where fluids with high viscosity flow more slowly than those with low viscosity.

Crystal Content

The proportion of crystals within a rock, influencing its texture and appearance, particularly relevant in the study of igneous rocks.

Composition

In geology, refers to the mineral makeup of a rock or sediment, indicating its chemical and physical properties.