Sommer, Inc., is considering a project that will result in initial after tax cash savings of $1.83 million at the end of the fir
st year, and these savings will grow at a rate of 2 percent per year indefinitely. The firm has a target debt-equity ratio of .80, a cost of equity of 12.3 percent, and an aftertax cost of debt of 5.1 percent. The cost-saving proposal is somewhat riskier than the usual project the firm undertakes; management uses the subjective approach and applies an adjustment factor of 1 percent to the cost of capital for such risky projects. What is the maximum initial cost the company would be willing to pay for the project
Tesla targeted its semi-business. Instead of focusing on innovation and technology like other cars in its range, Tesla may focus on the benefits it offers to the environment and truck drivers in terms of safety.
Companies do not need to change trucks frequently as they have four batteries so they can redeem even the life of semi trucks.
Since most of the general consumer population does not need a semi truck, Tesla should also focus on contacting direct shipping businesses rather than advertising to the public.
