Off HJ Insert AutoSave File Home Draw Page Layout Final exam V2 Protected View Formulas Data Review View Help Search PROTECTED VIEW Be careful-files from the Internet can contain viruses. Unless you need to edit, it's safer to stay in Protected View. The appropriate required rate of return is the cost of capital, which is 9 percent. A5 fxx B C 1 Problem 3 (2 x 7.5 = 15 points) 2 3 D E F G H 8 6 Tesla is considering a major expansion of its product line and has estimated the following free cash flows associate 4 The initial outlay would be $11.5 million, and the project would generate incremental free cash flows of $2.9 milli 5 The appropriate required rate of return is the cost of capital, which is 9 percent. 7 For each of the following evaluation criteria: calculate AND interpret (is the project acceptable or not, and w 9 a) PI (Profitability Index) 10 b) Modified IRR (Modified Internal Rate of Return). Use the cost of capital (9%) for the external reinvestment 11 12 13 14 15 16 17 18 19 PO 1