WestJet Airlines Is Considering Purchasing 20 New Planes That Will

question 73

Multiple Choice

WestJet Airlines is considering purchasing 20 new planes that will save the company $25 million per year in fuel and maintenance costs for the next 10 years.If the cost of the new planes is $200 million dollars and WestJet's WACC is 8.5%,what is the NPV of the project?

• A)-$200,000
• B)$50 million
• C)$30.4 million
• D)$0
• E)$4.4 million

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Definitions:

Usury

The practice of charging excessively high interest rates on loans, typically beyond the legal limit.

Maximum Interest Rate

The highest rate of interest that can be charged on a loan, as dictated by law or agreement.

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An obligation either to do or refrain from doing something, as set forth in a contract.

Unforeseen Circumstances

Situations or events that could not have been expected or planned for, often affecting the ability to fulfill contracts or obligations.