Assume General Motors Has a Weighted Average Cost of Capital

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