QUESTION $20$

Erie Shipping which currently transports goods in ships across oceans, is considering project A$,$ which would involve transporting goods in trains over railrcad tracks. FD$$ most of its existence, Erie Shipping transported goods in ships, trains, and trucks. Project A would require an initial investment of $$29,100\mathrm{.}00$ and is expected to produce annual cash flows of $$2,738,00$ 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 project's cost of capital?

Firm

Line of Business

WACC

Ene Shipping

Transports goods in ships across oceans

$11\mathrm{.}89$ percent

Thomas Shipping

Transports goods in trains over railroad tracks $9\mathrm{.}01$ percent

CB Truckers

Transports goods in trucks on roads

$16\mathrm{.}76$ percent

Diversified Shipping Transports goods in ships, trains, and trucks $13\mathrm{.}27$ percent

$$12763\mathrm{.}48($plus or minus $$10)$

$ $$607225($plus or minus $$10)$

$$1288\mathrm{.}46($plus or minus $$10)$

$$-8466.99($plus or minus $$10)$

None of the above is within $$10$ of the correct answe