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6. Kathy's of Illinois specializes in clothing for female executives living and working in the financial district of Chicago. Allen's of Pennsylvania specializes in clothing

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6. Kathy's of Illinois specializes in clothing for female executives living and working in the financial district of Chicago. Allen's of Pennsylvania specializes in clothing for women who live and work in the rural areas of Western Pennsylvania. Kathy's currently has a cost of capital of 11 percent while Allen's cost of capital is 9 percent Both firms are currently considering an exactly same expanding plan to expand their clothing line to encompass working women in the rural upstate region of New York State. That is, the cash flows from the project will be exactly the same for the two companies NPV of the expansion project: $36,900 at a 9 percent discount rate -$13,200 at an 11 percent discount rate All the above information is shared with the two companies. Assuming no impact of capital structure, which firm or firms should expand into rural New York State? a. both Kathy's and Allen's b. Kathy's only c. Allen's only d. neither Kathy's nor Allen's

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