4. McDonald's is entering a new market, and is deciding between building a large store...
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4. McDonald's is entering a new market, and is deciding between building a large store or a small store. After they make their decision, Burger King will decide if they should also enter this market, too. Using the graphic below, explain McDonald's optimal strategy (large store or small store) under each of the following scenarios: a. Burger King requires a rate of return of at least 15% on all investments. b. Burger King requires a rate of return of at least 18% on all investments. C. Burger King requires a rate of return of at least 21% on all investments, Rates of Return: Enter McDonald's -16% Burger King -16% Burger King's Decision: Rates of Return; Large Store Enter or don't enter Don't Enter McDonald's -25% Burger King - na McDonald's Decision: Buy a large store or a small store Rates of Return; Burger King's Decision: Small Store Enter McDonald's -20% Burger King -20% Enter or don't enter Don't Rates of Return: Enter McDonald's -30% Burger King - na
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