Elon Musk is considering building a Giga factory in Northern Nevada. His team projected the capital outlay for this factory today will be 5,000 million. For the next year, the cash flow (not net income) will be projected to be 1,500 million. For the second year, the cash flow (not net income) will be projected to be 1,800 million. For the third year, the cash flow (not net income) will be projected to be 4,000 million. If the cost of this project is 5%, what is the project's net present value? Will Elon Musk go ahead with this project or not if his decision will be based on NPV? Why?

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Step 1 Calculate the present value of the future cash flows The present value of a future cash flow ... View the full answer