New Flyer Industries Has Decided to Expand Its Production of Hybrid

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