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:

Timetable

A scheduled plan of times at which events, classes, or transport services are intended to occur.

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The process of planning, organizing, directing, and controlling the financial resources and spending of an organization or project to achieve its objectives.

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