Jack Is Considering Adding Toys to His General Store

question 7

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:

Government Lotteries

State-run games of chance that allow participants to win monetary prizes based on randomly drawn numbers or symbols.

Tax Revenues

The income that is gained by governments through taxation, used to fund public expenditures.

States

Political entities characterized by a defined territorial area, a permanent population, a government, and the capacity to enter into relations with other states.

Government Employees

Individuals who work in various departments and agencies of the government and are responsible for implementing public policies and providing services to citizens.