Leo Is Considering Adding a Deli to His General Store

Multiple Choice

Leo is considering adding a deli to his general store.The remodelling expenses and shelving costs are estimated at $27,500.Deli sales are expected to produce net cash inflows of $7,300,$8,600,$9,700,and $9,750 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 3.19 years
B) Yes; because the payback period is 2.82 years
C) No; because the project never pays back
D) No; because the payback period is 2.82 years
E) No; because the payback period is 3.19 years