Assume Ford Motors Expects a New Hybrid-Engine Project to Produce

question 27

Multiple Choice

Assume Ford Motors expects a new hybrid-engine project to produce incremental cash flows of $50 million each year, and expects these to grow at 4% each year. The upfront project costs are $420 million and Ford's weighted average cost of capital is 9%. If the issuance costs for external finances are $20 million, what is the net present value (NPV) of the project?

• A) $504 million
• B) $560 million
• C) $588 million
• D) $616 million