Problem:
Ford Motors expects a new hybrid-engine project to produce incremental cash flows of $100 million each year and expects these to grow at 4% each year. The upfron project costs are $900 million and ford's weighted average cost of capital is 9%.
Required:
If the issuance costs for external fincances are $10 million what is the net present value (NPV) of the project?
A) 1800 million
b) 1290 million
c) 1100 million
d) 1090 million
Note: Be sure to show how you arrived at your answer.