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?

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D) Compute the present value of future cash flows using the WACC, and subtract the investment cost. 11ea84dc_f52b_532b_9a63_7b0435e0c406_TB1316_00_TB1316_00 NPV = -$150 million + $30 million / 1.1 + ($30 million + $250 million) / (1.1)² 11ea84dc_f52b_532c_9a63_b50ee2b0a8ed_TB1316_11_TB1316_11

Assume General Motors Has a Weighted Average Cost of Capital