A Convenience Store Owner Is Contemplating Putting a Large Neon

question 2

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.

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Definitions:

Bargaining Rights

The legally protected ability of workers to negotiate employment terms, including wages and working conditions, collectively through representatives or unions.

Voluntary Recognition

The process by which an employer acknowledges a labor union as the official bargaining representative for its employees without requiring a formal election.

Supervisory Exclusions

Provisions within labor laws that prevent individuals with managerial or supervisory roles from participating in collective bargaining units.

NLRA

The National Labor Relations Act, a foundational piece of United States legislation that protects the rights of employees to organize and to bargain collectively with their employers.