A convenience store owner is contemplating putting a large neon sign over his store. It would...
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A convenience store owner is contemplating putting a large neon sign over his store. It would cost $38,000 but is expected to bring an additional $17,500 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%? Yes, since the cash flows after two years are greater than the initial investment. Yes, since it will pay back its initial investment in two years. O No, since the value of the cash flows over the first two years are less than the initial investment. O No, since the value of the cash flows into the store, in present dollars, are equal to the initial investment. A convenience store owner is contemplating putting a large neon sign over his store. It would cost $38,000 but is expected to bring an additional $17,500 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%? Yes, since the cash flows after two years are greater than the initial investment. Yes, since it will pay back its initial investment in two years. O No, since the value of the cash flows over the first two years are less than the initial investment. O No, since the value of the cash flows into the store, in present dollars, are equal to the initial investment. A convenience store owner is contemplating putting a large neon sign over his store. It would cost $38,000 but is expected to bring an additional $17,500 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%? Yes, since the cash flows after two years are greater than the initial investment. Yes, since it will pay back its initial investment in two years. O No, since the value of the cash flows over the first two years are less than the initial investment. O No, since the value of the cash flows into the store, in present dollars, are equal to the initial investment.
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Related Book For
Fundamentals of Cost Accounting
ISBN: 978-0077398194
3rd Edition
Authors: William Lanen, Shannon Anderson, Michael Maher
Posted Date:
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