Question: Please help me with this question. You are competing against Keio Electric Auto and Meiji Future Cars. Assume a two year project to produce and
Please help me with this question.
You are competing against Keio Electric Auto and Meiji Future Cars. Assume a two year project to produce and sell electric cars. The fixed cost (infrastructure cost) is estimated at 1,000. The market size for electric cars is estimated at 100,000. You target 5% of the market and estimate a profit margin of 10%. Assume cash flows equals profits. Assume the risk of your project is equivalent to Tesla company. Obtain the beta for Tesla from the Yahoo USA Finance website (should be far larger than one). Attach a screen shot of the information. Assume the riskfree rate is 3.5% and assume the market risk premium is 5%. Obtain the net present value (NPV) for this project. Will you invest in this project based on the NPV decision rule? Calculate up to two decimal places. Show all work and explain your logic/rationale.
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