2. NIO, Inc. is a new-listed firm with 1 billion shares outstanding. To value the firm, you estimate that 2019 free cash flow in the coming year to be $50 million, and you expect the firm's free cash flows to grow by 5% per year. Because the firm has only been listed on the stock exchange for a short time, you do not have an accurate assessment of NIO's equity beta. However, you do have beta data for Tesla, another firm that manufactures electric cars: Equity beta Debt beta Debt-equity ratio Tesla 1.2 0.4 0.25 Assume NIO has a debt-equity ratio of 1, it is not expected to change, and the debt is risk free. Also, NIO's corporate tax rate is 25%, the risk-free rate is 2%, and the expected return on the market portfolio is 8%. Estimate NIO's equity cost of capital. Hint: start by computing the asset beta of Tesla, assume this is identical to the asset beta of NIO, and then compute the equity beta of NIO. Estimate NIO's share price using your work in part a. b