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A security firm is offered $80,000 in one year for providing CCTV coverage of a property. The cost of providing this coverage to the security
A security firm is offered $80,000 in one year for providing CCTV coverage of a property. The cost of providing this coverage to the security firm is $71,000, payable now, and the interest rate is 6.5%. Should the firm take the contract? O Yes, since net present value (NPV) is positive. It does not matter whether the contract is taken or not, since NPV = 0. Yes, since net present value (NPV) is negative. O No, since net present value (NPV) is negative. A Toronto 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 $14,000 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 9%? O No, since the overall NPV is negative O Yes, since the value of the cash flows into the store, in present dollars, are greater than the initial investment O Yes, since the cash flows after two years are greater than the initial investment. O No, since the value of the cash flows over the first two years are less than the initial investment
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