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

---

Definitions:

Biopsychosocial Approach

An integrated perspective that acknowledges that biological, psychological, and social factors all play a significant role in human functioning in the context of disease or illness.

Self-Esteem

One’s feelings of high or low self-worth.

Behavior Genetics

The study of the role genetic factors play in shaping behaviors, traits, and abilities.

Observable Responses

Behaviors or actions that can be seen or measured as a reaction to stimuli.