Answer: Option(b) is the correct option.
Explanation:
According to the question,we are provided with investment value which is $148,000.
- Therefore,
Net present value (NPV)of Children Clothing will be calculated as :-
$121,000 - $148,000 = - $27,000
Thus, a negative value of NPV of children clothing is obtained which is not an acceptable value option.
- Now ,Net present value(NPV) of Exclusive gift is as follows:-
$178,000 - $148,000= $30,000
As the obtained NPV value for exclusive gift option is $30,000 which is a positive value, it can be accepted
- Now, calculation of NPV of decorator items is as follows:-
$145,000 - $148,000= - $3,000
Net present value of decorator items is obtained as -$3,000 which is a negative value.Thus, it is not acceptable.
Therefore, the correct option is option(b) because it as positive value of NPV and decorator items and children clothing as negative NPV value which makes them unacceptable .
