eal Jungle, which currently operates a(n) food truck, is considering project A, which would involve opening a(n) laundromat. For most of its existence, Teal Jungle has operated a(n) food truck, laundromat, and yoga studio. Project A would require an initial investment of 11,259 dollars and is expected to produce annual cash flows of 998 dollars each year forever with the first annual cash flow expected in 1 year. What is the NPV of project A, based on the information in this paragraph and the following table and applying the pure play approach to determining a projects cost of capital?

Firm	Line of business	WACC
Teal Jungle	food truck	12.89 percent
Emerald Grove	yoga studio	15.79 percent
Green Forest	laundromat	10.27 percent
White Mountain	food truck, laundromat, and yoga studio	13.17 percent

2-

Yellow Sand Technology has a weighted-average cost of capital of 10.13 percent and is evaluating two projects: A and B. Project A involves an initial investment of 4,833 dollars and an expected cash flow of 8,071 dollars in 8 years. Project A is considered more risky than an average-risk project at Yellow Sand Technology, such that the appropriate discount rate for it is 1.33 percentage points different than the discount rate used for an average-risk project at Yellow Sand Technology. The internal rate of return for project A is 6.62 percent. Project B involves an initial investment of 5,024 dollars and an expected cash flow of 8,290 dollars in 5 years. Project B is considered less risky than an average-risk project at Yellow Sand Technology, such that the appropriate discount rate for it is 1.37 percentage points different than the discount rate used for an average-risk project at Yellow Sand Technology. The internal rate of return for project B is 10.54 percent. What is X if X equals the NPV of project A plus the NPV of project B?

3- Several companies, including Blue Eagle Media and Red Royal Entertainment, are considering project A, which is believed by all to have a level of risk that is equal to that of the average-risk project at Blue Eagle Media. Project A is a project that would require an initial investment of 4,619 dollars and then produce an expected cash flow of 6,697 dollars in 4 years. Project A has an internal rate of return of 9.73 percent. The weighted-average cost of capital for Blue Eagle Media is 11.25 percent and the weighted-average cost of capital for Red Royal Entertainment is 12.29 percent. What is the NPV that Red Royal Entertainment would compute for project A?

4- The expected return on the market is 14.04 percent, the risk-free rate is 4.47 percent, and the tax rate is 45 percent. Fairfax Paint has 1,400,000 common shares outstanding that are priced at 30 dollars per share and have an expected return of 15.26 percent and an expected real return of 13.36 percent. Last year, Fairfax Paint common stock had a return of 17.12 percent. The company also has 400,000 shares of preferred stock outstanding that are priced at 20 dollars per share and have an expected return of 11.17 percent and an expected real return of 9.33 percent. Last year, Fairfax Paint preferred stock had a return of 13.55 percent. Finally, the company has 20,000 bonds outstanding with a coupon rate of 11.68 percent, yield-to-maturity of 5.84 percent, current yield of 8.34 percent, face value of 1000 dollars, and price of 1,400 dollars. What is the weighted average cost of capital for Fairfax Paint? Answer as a rate in decimal format so that 12.34% would be entered as .1234 and 0.98% would be entered as .0098.