Phil's Is a Sit-Down Restaurant That Specializes in Home-Cooked Meals

question 60

Multiple Choice

Phil's is a sit-down restaurant that specializes in home-cooked meals.Theresa's is a walk-in deli that specializes in specialty soups and sandwiches.Both firms are currently considering expanding their operations during the summer months by offering pre-wrapped donuts,sandwiches,and wraps at a local beach.Phil's currently has a WACC of 14 percent while Theresa's WACC is 10 percent.The expansion project has a projected net present value of $12,600 at a 10 percent discount rate and a net present value of -$2,080 at a 14 percent discount rate.Which firm or firms should expand and offer food at the local beach during the summer months?

• A)Phil's only
• B)Theresa's only
• C)both Phil's and Theresa's
• D)neither Phil's nor Theresa's
• E)cannot be determined from the information provided

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Definitions:

Solicited Proposals

Proposals requested by a potential client or buyer, often in response to a specific problem or opportunity they have identified.

Unsolicited Proposals

Proposals or pitches submitted to an organization without their request, often from an outside source seeking to offer services or ideas.

Planning Process

A systematic approach to setting goals, developing strategies, and outlining tasks and schedules to achieve those goals.

Analytical Report

A document that presents detailed analysis and evaluation of a specific issue or problem, often intended to support decision-making processes.