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:

Section 1981

A civil rights statute in U.S. law aimed at preventing racial discrimination in contracts.

Racial Discrimination

The unfair treatment of individuals based on their race or ethnicity.

National Origin

The country where a person was born in, or where their ancestors came from.

Homosexuality

Romantic or sexual attraction or behavior between members of the same sex or gender.