General Motors Has a Weighted Average Cost of Capital of 10%.GM

question 32

Multiple Choice

General Motors has a weighted average cost of capital of 10%.GM is considering investing in a new plant that will save the company $20 million over each of the first two years,and then $15 million each year thereafter.If the investment is $150 million,what is the net present value (NPV) of the project?

• A)$6.6 million
• B)$7.3 million
• C)$7.9 million
• D)$8.7 million

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Definitions:

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