Flo is considering three mutually exclusive options for the additional space she plans to add to her specialty women's store.The cost of the expansion will be $148,000.She can use this additional space to add children's clothing, an exclusive gifts department, or a home décor section.She estimates the present value of the cash inflows from these projects are $121,000 for children's clothing, $178,000 for exclusive gifts, and $145,000 for decorator items.Which option(s), if any, should she accept?

Question

Flo is considering three mutually exclusive options for the additional space she plans to add to her specialty women's store.The cost of the expansion will be $148,000.She can use this additional space to add children's clothing, an exclusive gifts department, or a home d&#233;cor section.She estimates the present value of the cash inflows from these projects are $121,000 for children's clothing, $178,000 for exclusive gifts, and $145,000 for decorator items.Which option(s), if any, should she accept?

Quizplus · Accepted Answer

The exclusive gifts option has a present value of cash inflows ($178,000) that exceeds the cost of the expansion ($148,000), making it the only financially viable option.

Flo Is Considering Three Mutually Exclusive Options for the Additional