Question

Jack’s diner that specializes in made to order dinners. Jennifer's is a drive through burger shop that is known for their double cheese burgers. Both companies are thinking about expanding operations during the springs and summer months by creating a mobile food truck to use at the local beach. Jack's has a WACC of 11% while Jennifer's has a WACC is 15 percent. Each project has a projected net present value of $11,500 at a discount rate of 11% and a net present value of -$3,075 at a discount rate of 14%. Of the two companies, which company or companies should proceed with the expansion?

Select one:

a. Jack's only

b. Jennifer's only

c. both Jack's and Jennifer's

d. neither Jack's nor Jennifer's

e. cannot be determined from the information provided

Answer 1