Use the information below to answer the remaining questions:

Steve is considering adding tools to his auto body shop. He estimates that the cost of inventory will be $3,500. The remodeling expenses and shelving costs are estimated at $2,400. Tool sales are expected to produce net cash inflows of $2,800, $2,600, and $2,600 over the next three years, respectively. Should Steve add tools to his store if he assigns a two-year payback period to this project? Why or why not?

Question 8 (1 point)

The value needed but not given is:

Question 8 options:

a)	The cost of the inventory minus the remodeling work (in dollars)

b)	The internal rate of return of the cash flows (as a percentage)

c)	The total cost of the project (in dollars)

d)	The discounted cash flows (in dollars)

The total cost of the project is:

a)

$2,400

b)

$3,500

c)

$5,900

d) $5,400

The second value needed but not given is:

a)	The net present value of the cash flows (in dollars)

b)	The number of years needed to pay back the investment (in real numbers)

c)	The internal rate of return based upon the cash flows (as a percentage)

d)	The future value of the cash flows at the end of year 4 (in dollars)

The project should be:

a)	Accepted: The payback period is 1.88 years

b)	Rejected: The payback period is 2.93 years

c)	Rejected: The payback period is 2.19 years

d)	Accepted: The payback period is 2.93 years