Roger Is Considering Adding Toys to His General Store

Multiple Choice

Roger is considering adding toys to his general store. He estimates that the cost of inventory will be $6,400. The remodeling expenses and shelving costs are estimated at $2,100. Toy sales are expected to produce net cash inflows of $1,400, $2,300, $3,100, and $2,000 over the next four years, respectively. Should Roger add toys to his store if he assigns a three-year payback period to this project? Why or why not?

A) No; The payback period is 3.55 years.
B) No; The payback period is 3.85 years.
C) Yes; The payback period is 2.55 years.
D) Yes; The payback period is 2.87 years.
E) Yes; The payback period is 3.13 years.