Assume General Motors Has a Weighted Average Cost of Capital

question 93

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 $25 million each year thereafter. If the investment is $150 million, what is the net present value (NPV) of the project?

• A) $65.2 million
• B) -$76.1 million
• C) -$86.9 million
• D) $108.7 million

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Definitions:

Stimulant

A substance that raises levels of physiological or nervous activity in the body, often used to enhance alertness or physical performance.

Amphetamines

A class of stimulant drugs that increase activity within the brain and nervous system, often used to treat ADHD and narcolepsy but can be abused as performance-enhancing or recreational drugs.

Personal Goal

An individual’s aim or desired outcome that they work towards through action or behavior, often reflecting personal values and aspirations.

Endorphins

Chemicals naturally produced by the body that alleviate pain and enhance sensations of pleasure and well-being.