Question
2. Go to www.sec.gov and follow the Search Edgar For Company Filings link, and search for filings made by TESLA motors (TSLA). Find the most
2. Go to www.sec.gov and follow the "Search Edgar For Company Filings" link, and search for filings made by TESLA motors (TSLA). Find the most recent 10Q or 10K and download the form. Look on the balance sheet to find the book value of debt and the book value of equity.
To estimate the cost of equity for TSLA go to finance.yahoo.com follow the "Bonds" link. What is the yield on three-month treasury bills? Using the historical market risk premium, what is the cost of equity for TSLA using CAPM?
You now need to calculate the cost of debt for TSLA. Go to finra-markets.morningstar.com, find bonds, and enter TSLA. Find the yield to maturity for each of TSLA's bonds. What is the weighted average cost of debt for TSLA using the book value weights and using the market value weights? Does it make a difference in this case if you use book value weights or market value weights? Show your work in Excel with the correct formulas.
You now have all the necessary information to calculate the weighted average cost of capital for TSLA. Calculate this using book value weights and market value weights assuming TSLA has a 35 percent marginal tax rate. Which number is more relevant? Show your work in excel with relevant formulas.
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