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Tesla is assessing a $1,500,000 investment opportunity. The financial projections include: Initial Investment: $1,500,000 Depreciation @ 12%: $180,000/year Book Values at Year-End: $1,320,000, $1,140,000, $960,000,

Tesla is assessing a $1,500,000 investment opportunity. The financial projections include:

  1. Initial Investment: $1,500,000
  2. Depreciation @ 12%: $180,000/year
  3. Book Values at Year-End: $1,320,000, $1,140,000, $960,000, $780,000, $600,000, $420,000, $240,000, $60,000, $0
  4. Cash Flows: $250,000, $300,000, $200,000, $150,000, $100,000, $80,000, $70,000, $60,000, $50,000
  5. Profits: $70,000, $120,000, $20,000, $0, $-50,000, $-70,000, $-90,000, $-100,000
  6. ARR: 4.67%, 8%, 1.33%, 0%, -3.33%, -4.67%, -6%, -6.67%
  7. Average Profits: $-12,000
  8. Average Investment: $900,000
  9. Average ARR: -1.33%
  10. Payback: 5.6 years
  11. NPV @ 10%: $45,000

Requirements:

  1. Calculate the ARR, payback period, and NPV for Tesla's investment.
  2. Assess the investment's profitability.
Provide a final recommendation.

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