Ford Motors expects a new hybrid-engine project to produce incremental cash flows of $45 million each year, and expects these to grow at 5% each year. The upfront project costs are $380 million and Ford's weighted average cost of capital is 8%. If the issuance costs for external finances are $20 million, what is the net present value (NPV) of the project?
Ford Motors expects a new hybrid-engine project to produce incremental cash flows of $45 million each year, and expects these to grow at 5% each year. The upfront project costs are $380 million and Ford's weighted average cost of capital is 8%. If the issuance costs for external finances are $20 million, what is the net present value (NPV) of the project?
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter14: Real Options
Section: Chapter Questions
Problem 3MC: Tropical Sweets is considering a project that will cost $70 million and will generate expected cash...
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Ford Motors expects a new hybrid-engine project to produce incremental cash flows of $45 million each year, and expects these to grow at 5% each year. The upfront project costs are $380 million and Ford's weighted average cost of capital is 8%. If the issuance costs for external finances are $20 million, what is the
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