Store-It Owns and Operates Self-Storage Units Across the Country

question 86

Multiple Choice

Store-It owns and operates self-storage units across the country. The firm is well established and has a cost of capital of 9 percent. Stop n Drive operates several stations which supply bread and
Milk along with gasoline, diesel, and kerosene fuels. Stop n Drive's cost of capital is 13 percent. Both
Companies are considering opening a chain of bakeries which would supply fresh baked goods for
Individual consumers. The internal rate of return on these bakeries is 11.5 percent. Which firm or
firms, if either, should open the bakery outlets?

• A) Store-It only.
• B) Stop n Drive only.
• C) Both Store-It and Stop n Drive.
• D) Either Store-It or Stop n Drive.
• E) Cannot be determined from the information given.

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Definitions:

Inverted-U Theory

A hypothesis suggesting that there is an optimal level of some variable (such as stress or arousal) for performance, with both too little and too much leading to lower performance.

R&D Expenditures

Funds allocated by governments, institutions, or companies towards research and development activities.

Concentration Industries

Industries where a small number of large firms dominate the market, often leading to less competition and higher prices for consumers.

Sales

refers to the transactions involving the exchange of goods or services for money.