Question
A convenience store owner is considering putting a large neon sign over her store. The sign would cost $60,000 and is expected to bring an
A convenience store owner is considering putting a large neon sign over her store. The sign would cost $60,000 and is expected to bring an additional $32,000 of profit to the store every year for the next 5 years. Would the sign be a worthwhile investment if evaluated using a payback period of 2 years or less?
Question 13 options:
A)Yes, because the total value of the cash flows over the first two years are higher than the initial investment.
B)No, because the value of the cash flow over the first year is lower than the initial investment.
C)No, because the initial investment will not be paid back within 2 years.
D)Yes, because the total value of cash flows after 2 years are higher than the initial investment.
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