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.

1. Would this project be worthwhile if evaluated using a payback period of two years or less and if the cost of capital is 10%?

2. What if instead, the project is evaluated using a discounted payback period of three years or less?

Answer rating: 100% (QA)

To determine whether the project would be worthwhile using a payback period of two years or less we ... View the full answer