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aliina [53]
3 years ago
5

A 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​ $24,000 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​ 10%?
Business
1 answer:
Radda [10]3 years ago
4 0

Answer:  <em>No, since the value of the cash flows over the first two years are less than the initial investment</em>

Explanation:

value of cash flows for the first two years = $48,000 (24,000x2)

Initial Investment = $50000

Because the additional $48,000 profit during the two year payback is not grater than the $50,000 purchase, they should not put the large neon sign up.

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The answer and procedures of the exercise are attached in the following archives.

Step-by-step explanation:

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3 years ago
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learn more about Hardware department: brainly.com/question/27803497

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