Flo is considering three mutually exclusive options for the additional space she plans to add to her specialty women's tore.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 fordecorator items.Which option(s),if any,should she accept?

Question

Quizplus · Accepted Answer

Flo should choose the option that gives her the highest present value of cash inflows, which in this case is $178,000 for the exclusive gifts department. Since the exclusive gifts option yields the highest present value of cash inflows, it is the best choice. Choosing any other option or combination of options would result in a lower present value of cash inflows.

Flo Is Considering Three Mutually Exclusive Options for the Additional