General Motors Has a Weighted Average Cost of Capital of 9%.GM

question 3

Multiple Choice

General Motors has a weighted average cost of capital of 9%.GM is considering investing in a new plant that will save the company $25 million over each of the first two years,and then $10 million each year thereafter.If the investment is $100 million,what is the net present value (NPV) of the project?

• A)$34.2 million
• B)$39.7 million
• C)$37.5 million
• D)$36.5 million

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