Question: In 2 0 1 7 , Tesla issued a bond for the first time. It issued a 1 0 - year bond with $ 1
In Tesla issued a bond for the first time. It issued a year bond with $B in face value, offering a coupon rate annual The bond was issued at par value ie price Now, due to the improvement of the firms financial status, the yield has dropped to What is the current price of this bond? Assume there are years to maturity, and Tesla has just made the last coupon payment. At the time of issuance, Teslas stock price was $ and there were M shares outstanding. Beta was The riskfree rate was and market risk premium was Assume a tax rate of for Tesla, and it had enough earnings to benefit from tax shield. What was its aftertax WACC before and after the bond issuance in If in Tesla had changed the issue size to $B also coupon rate, sold at par instead of $B what would be the new cost of equity right after issuance?
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