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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Definitions:

Branding Process

The series of strategies and actions a company undertakes to develop a strong and consistent identity in the market that resonates with its target audience.

Diffusion Curve

A graph that represents the rate at which a new innovation is adopted by users over time, typically resembling an "S" shape.

Product Life Cycle

The stages through which a product goes from its introduction into the market, through growth and maturity, and eventually into decline.

Dynamically Discontinuous Innovations

Innovations that significantly alter the market dynamics or how consumers interact with a product or service category.