Alicia Is Considering Adding Toys to Her Gift Shop

Multiple Choice

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 $850. Toy sales are expected to produce net cash inflows of $1,300, $4,900, $4,400, and $4,100 over the next four years, respectively. Should Alicia add toys to her store if she assigns a 3-year payback period to this project? Why or why not?

A) No; The payback period is 3.94 years.
B) No; The payback period is 2.94 years.
C) Yes; The payback period is 3.94 years.
D) Yes; The payback period is 3.09 years.
E) Yes; The payback period is 2.94 years.