Wayne's of Moose Jaw specializes in clothing for female executives living and working in the financial district of Moose Jaw, SK. Allen's of MB specializes in clothing for women who live and work in the rural areas of Manitoba. Both firms are currently considering expanding their clothing line to encompass working women in the rural region of Northern Saskatchewan. Wayne's currently has a cost of capital of 11 % while Allen's cost of capital is 9 %. The expansion project has a projected net present value of $36,900 at a 9 % discount rate and a net present value of - $13,200 at an 11 % discount rate. Which firm or firms should expand into rural Northern Saskatchewan?
A) Wayne's only.
B) Allen's only.
C) Neither Wayne's nor Allen's.
D) Both Wayne's and Allen's.
E) Cannot be determined from the information provided.
Correct Answer:
Verified
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