Intro

It is the end of $2024.$ You're a financial analyst working for Tesla Motors. The company is considering producing

the new Model Z car and is predicting the following sales $($in $ million$).$ Assume all cash flows occur at the end of

the year.

COGS and SG&A are expected to add up to $70\%$ of sales. After $2029,$ production will end and the factory will

shut down.

To start production at the beginning of $2026,$ Tesla has to invest $$200$ million now and $$100$ million in $2025$ to

build a new factory. After completion at the end of $2025,$ the factory can be depreciated straight to zero over $10$

years. The factory is expected to be worth $$100$ million at the end of $2029.$

Net working capital consists mainly of inventory of car components, minus some current liabilities. Net working

capital is expected to be always $15\%$ of sales, until the last year of the project when it will all be recouped.

Tesla has a weiahted averaae cost of capital of $12\%$ and a marainal tax rate is $17\%.$

Part $2$

Extend the spreadsheet to find net capital spending for each year. What is net capital spending for $2029($in $

million$)?$ Include the after$-$tax salvage value of the factory and enter it with the correct sign.

Part $4$

Extend the spreadsheet to find the cash flow from assets for each year. What is the CFA for $2029($in $ million$)?$