Black Ridge financial has been presented with 2 possible expansion opportunities. The first is to...
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Black Ridge financial has been presented with 2 possible expansion opportunities. The first is to start a new branch in Canada, while the second option would be to start a new branch in Ireland. Details regarding the projects is below
Year
1
2
3
Canada
CF
$ (200,000)
$ (60,000)
$ 500,000
Ireland
CF
$ (3,000,000)
$ 1,500,000
$ 4,000,000
Cost of Equity
15%
Cost of Debt
7%
Total Equity
$ 15,000,000
Total Debt
$ 6,000,000
If the firm only has the ability to pursue one project, which one should they pick and why?
Group of answer choices
Ireland because the NPV is lower than the cost of capital
Canada because the IRR is 0.7% higher
Canada because it has a higher NPV
Canada because the IRR is 31% compared to Ireland's 20%
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