40 Points Sielais contemplating on producing passenger-carrying quadcopters. The company has already invested 18 10%, should the company go with this project? business and incurs total variable costs of $20,000/year and total fixed costs of $5,000/year. The auto business was built five years ago for $75,000 and is being fully depreciated straight line over a ten-year life since then. It will have a scrap value of $5,000 at the end of its useful life. The quadcopter business will cost for $15,000. If Testa decides to go forward with the quadcopter project, the following strategic actions will need to be undertaken: 1 Tesla will immediately sell its auto manufacturing business for $20,000 II. To supply its quadcopters with batteries, Tesla will need to build an additional battery production facility for $15,000 in two years, a project initially planned to take place in four years. The battery facility is not depreciable, has no serap value and will be fully expensed to capital expenditures Currently, Tesla rents its satellite network to NASA for $15,000/year. If the quadcopter project is accepted, this network will be used in-house and will not be rented out to NASA anymore. IV Tesla will need to immediately spend $5,000 to make its satellite network compatible for use with its quadcopters. The retooling cost is not depreciable and will be fully expensed to capital expenditures. V. The satellite network has a remaining life of five years and is already being fully depreciated at a rate of $2,000/year to a scrap value of zero. Tesla expects to sell 5,000 quadcopters/year at $50 each with a variable cost of $30/vehicle and a total fixed overhead cost of $10,000/year. Tesla's advertising expenses will increase from its current level of $1,000/year to $3,000/year. Tesla will have to increase its net working capital from its current level of 10% of anticipated auto sales to 15% of anticipated quadcopter sales. If Tesla's tax rate is 21% and its WACC is 12%, should Tesla produce quadcopters? 40 Points