Assume General Motors Has a Weighted Average Cost of Capital

question 37

Multiple Choice

Assume General Motors has a weighted average cost of capital of 10%. GM is considering investing in a new plant that will save the company $30 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) $18.2 million
• B) $20.8 million
• C) $23.4 million
• D) $26.0 million

Discuss the value of employee involvement in enhancing decision-making and creativity.

Explain the rational choice paradigm and its limitations in decision-making.

Understand the potential barriers that can inhibit the accurate identification of business problems within the context of a competitive market environment.

Develop the ability to critically analyze the effectiveness of organizational strategies in response to market challenges.

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Definitions:

GDP PPP

Gross Domestic Product (GDP) measured in terms of the Purchasing Power Parity (PPP), which adjusts for price level differences across countries, providing a more accurate comparison of economic productivity and standards of living.

Infant Mortality

The rate at which babies under one year of age die, considered as an indicator of the health conditions of a population.

Demographic Data

Information related to the characteristics of populations, such as age, race, sex, income level, and employment, widely used in research and policy making.

Total Fertility Rate

The average number of children a woman is expected to have over her lifetime, a key demographic indicator of population growth.