Green Motors Expects a New Hybrid-Engine Project to Produce Incremental

question 31

Multiple Choice

Green Motors expects a new hybrid-engine project to produce incremental cash flows of $100 million each year and expects these to grow at 4% each year. The upfront project costs are $900 million and Green's weighted average cost of capital is 9%. If the issuance costs for external finances are $10 million, what is the net present value (NPV) of the project?

• A)$1 090 million
• B)$1 800 million
• C)$1 290 million
• D)$1 100 million

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Definitions:

Lean Production

A manufacturing methodology that focuses on reducing waste and improving efficiency to create more value for customers with fewer resources.

New Technologies

Current and emerging technological advancements that have the potential to significantly alter industries, economies, and lifestyles.

Streamline Systems

The process of simplifying operations and procedures to improve efficiency and reduce unnecessary steps or costs.

Total Quality Management

A comprehensive approach to long-term success through customer satisfaction, emphasizing continuous improvement of processes and products.