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Alicia is considering adding toys to her gift shop. She estimates the cost of new inventory will be $9,500 and remodeling expenses will be $1,300.
Alicia is considering adding toys to her gift shop. She estimates the cost of new inventory will be $9,500 and remodeling expenses will be $1,300. Toy sales are expected to produce net cash inflows of $3,300, $4,900, $4,400 and $4,100 over the next 4 years, respectively. Should Alicia add toys to her store if she requires a return of 20%?
A) Yes; IRR is 19.41%
B) No; NVP is -$123.69
C) Yes; NVP is $123.69
D) No; the payback period is 2.59 years
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