New Flyer Industries Has Decided to Expand Its Production of Hybrid

question 92

Multiple Choice

New Flyer Industries has decided to expand its production of hybrid transit buses.The firm expects incremental cash flows of $40 million per year for the next 10 years.The upfront cost of the expansion is $150 million,and there are additional issuance costs for external financing of $15 million.If the New Flyer's WACC is 7.5%,what is the NPV of the project?

• A)$235 million
• B)$125 million
• C)$110 million
• D)$95 million
• E)$219 million

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Definitions:

High Executive Salaries

Compensation that is significantly above the average wage, typically awarded to top-level management and executives.

Mechanized Process

An automated procedure or method involving machinery or technology to enhance efficiency and reduce human labor.

Operational Flexibility

The ability of a business or organization to adapt to changes in conditions, demand, or environment while maintaining efficiency and effectiveness.

Production Batches

Groups or lots of goods produced together during a manufacturing process, often under the same conditions over a specific time period.