Question
The Tesla, Inc invests $300,000 in new AI-driven auto-assembly robots and machinery that yields net after-tax cash flows of $75,000 at the end of each
The Tesla, Inc invests $300,000 in new AI-driven auto-assembly robots and machinery that yields net after-tax cash flows of $75,000 at the end of each of the next five years. The required rate of return (or the opportunity cost of capital) is 12%. What is the net present value (NPV) of the project? Is this project profitable? Please draw a cashflow diagram first. What is the Profitability Index of the project? Is this project profitable based on that? (You can use your financial calculator, online calculator, or EXCEL spreadsheet, an EXCEL function, NPV)
| Period | Cash Flow |
| 0 | -300,000 |
| 1 | 75,000 |
| 2 | 75,000 |
| 3 | 75,000 |
| 4 | 75,000 |
| 5 | 75,000 |
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International Finance Transactions Policy And Regulation
Authors: Hal Scott, Anna Gelpern
20th Edition
1609303164, 978-1609303167
