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

question 51

Multiple Choice

Assume Ford Motors expects a new hybrid-engine project to produce incremental cash flows of $45 million each year, and expects these to grow at 3% each year. The upfront project costs are $380 million and Ford's weighted average cost of capital is 9%. If the issuance costs for external finances are $10 million, what is the net present value (NPV) of the project?

• A) $324 million
• B) $378 million
• C) $360 million
• D) $396 million

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