A Convenience Store Owner Is Contemplating Putting a Large Neon

question 121

Multiple Choice

A convenience store owner is contemplating putting a large neon sign over his store.It would cost $50,000,but is expected to bring an additional $24,000 of profit to the store every year for five years.Would this project be worthwhile if evaluated using a payback period of two years or less and if the cost of capital is 10%?

• A)Yes,since it will pay back its initial investment in two years.
• B)Yes,since the value of the cash flows into the store,in present dollars,are greater than the initial investment.
• C)Yes,since the cash flows after two years are greater than the initial investment.
• D)No,since the value of the cash flows over the first two years are less than the initial investment.
• E)Yes,since the NPV is positive.

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Definitions:

Pupil

The opening in the center of the iris of the eye through which light enters the eye.

Eyespots

Pigmented organelles found in certain algae and unicellular organisms that allow them to sense light direction and intensity, aiding in phototaxis.

Light Source

An object that emits light, providing illumination for various applications, ranging from domestic lighting to scientific research.

Light Intensity

The amount of light energy per unit of area, an important factor in the photosynthesis process and plant growth.