Leo is considering adding a deli to his general store.The remodeling expenses and shelving costs are estimated at $2,500.Deli sales are expected to produce net cash inflows of $1,300,$1,600,$1,700,and $1,750 for Years 1 to 4,respectively.Leo has a firm 3-year payback requirement.Should he add the deli?
A)Yes;because the payback period is 1.75 years
B)Yes;because the payback period is 2.25 years
C)Yes;because the payback period is 1.90 years
D)No;because the payback period is 1.75 years
E)No;because the payback period is 2.25 years

Question

Quizplus · Accepted Answer

Payback = 1 + ($2,500 - 1,300)/$1,600 = 1.75 years;Accept

Leo Is Considering Adding a Deli to His General Store