Specialty retailer with multiple brick-and-mortar stores

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Reference no: EM131354046

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? Bruceton’s only Specialty Imports only Neither company Both companies The answer cannot be determined based on the information provided.

Reference no: EM131354046

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