MUST USE EXCEL

Tesla is deciding whether to invest in a new automobile assembly plant designed to produce autonomous vehicles, called T-quest. It will cost $400 million to build. If T-quest is successful, the plant will result in a constant stream of revenues for the next 20 years year of $600 million per annum. If the unsuccessful, the stream of revenues will be $300 million per annum. Teslas financial assessment predict a 40% chance of success, and 60% chance of failure. The costs of goods are 80% of revenues and will be constant through the years. Level of working capital is 5% of the next years sales revenues. The risk-adjusted cost of capital for this project is 20% ( This is the discount rate you will use), the opportunity cost of capital for the company is only 9%. ( The 9% isnt used at any point in the calculation) The marginal tax rate is 40% for the company.

The project has a 20-year term. Tesla uses straight-line depreciation method with a zero-salvage value.

1. USING EXCEL. Determine if Tesla should undertake this investment opportunity. Take your pick of the best investment criterion to use and solve the problem using only that criterion.