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Which company should open the Chicago store

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Question - Bruceton's is a specialty retailer with multiple brick-and-mortar stores and a cost of capital of 16.4 percent. Specialty Imports is a wholesaler of specialty items and has a cost of capital of 12.6 percent. Both firms are considering opening a new store in downtown Chicago at a cost of $1.1 million. Because this type of store would be trendy, it would have a life of only 8 years and no salvage value. The expected annual net cash flow is $229,000, regardless of which firm opens the store. Which company(ies), if either, should open the Chicago store?

Reference no: EM133068470

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