General Motors Has a Weighted Average Cost of Capital of 11%.GM

question 64

Multiple Choice

General Motors has a weighted average cost of capital of 11%.GM is considering investing in a new plant that will save the company $30 million over each of the first two years,and then $25 million each year thereafter.If the investment is $150 million,what is the net present value (NPV) of the project?

• A)$45 million
• B)-$51 million
• C)$-41 million
• D)$86 million

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Definitions:

Magnetic Motor Starter

An electromechanical device that safely starts and stops a motor by controlling the electrical power supplied to the motor.

Full Load Current

The current drawn by an electrical machine, such as a motor or transformer, operating at its rated capacity under designated conditions.

Normally Closed

Normally closed is a term used to describe a configuration of an electrical or mechanical switch in which the default state of the switch is making contact, allowing current flow, until actuated.

Relay Contact

A relay contact is a switch operated by an electromagnet in a relay, used to open or close circuits electromechanically or electronically.