Jack Is Considering Adding Toys to His General Store

question 44

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 $1,300,$1,600,$1,700,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 3.63 years
• D)No; because the payback period is 2.02 years
• E)No; because the payback period is 3.63 years

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Definitions:

Fraud and Bribery

Illegal practices involving deception for personal gain or influencing someone through corrupt means, often encountered in politics, business, and other fields.

Calvin Coolidge

The 30th President of the United States (1923–1929), known for his conservative economic policies and for overseeing a period of peace and prosperity in the 1920s.

Government-backed Price Supports

Financial mechanisms provided by governments to maintain the market price of specific goods or commodities at a predetermined level.

Deficit Spending

The practice of spending more money than is taken in through revenues, leading to a government budget deficit, often financed by borrowing.