Tesla Inc. is considering expanding its battery production facilities to meet the growing demand for electric vehicles. The expansion will require an initial investment of $1.5 billion. It is expected to generate additional annual cash flows of $300 million for the next 7 years. The company uses a discount rate of 8%.

• Requirements:
  • Calculate the Net Present Value (NPV) of the expansion.
  • Determine the Internal Rate of Return (IRR).
  • Assess whether Tesla Inc. should proceed with the expansion based on NPV and IRR.

Discuss the potential impact of this expansion on Tesla's financial statements and overall financial health