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:

Oedipal Complex

A concept in psychoanalytic theory referring to a child's feeling of desire for their opposite-sex parent and jealousy and rivalry with their same-sex parent.

Freudians

Refers to followers of the theories and therapeutic methods developed by Sigmund Freud, particularly those related to psychoanalysis.

Self-Efficacy

The belief in one's own capability to organize and execute the courses of action required to manage prospective situations.