Tesla's Balance Sheet: Year 2016 2017 2018 2019 2020 2021 Total Assets $ 22,664 $ 28,655 $ 29,740 $ 34,309 $ 52,148 $ 62,131 Operating Liabilities $ 2,917 $ 3,715 $ 4,777 $ 5,862 $ 8,865 $ 14,328 Net Operating Assets $ 19,747 $ 24,940 $ 24,963 $ 28,447 $ 43,283 $ 47,803 Total Debt $ 7,128 $ 10,315 $ 11,971 $ 13,419 $ 11,739 $ 6,834 Total Equity and Claims $ 12,619 $ 14,625 $ 12,992 $ 15,028 $ 31,544 $ 40,969 Total Debt, Equity and Claims $ 19,747 $ 24,940 $ 24,963 $ 28,447 $ 43,283 $ 47,803 Tesla's Income Statement: Year 2016 2017 2018 2019 2020 2021 Total Revenue $ 7,000 $ 11,759 $ 21,461 $ 24,578 $ 31,536 $ 53,823 Cost of Revenue, Total $ 5,401 $ 9,536 $ 17,419 $ 20,509 $ 24,906 $ 40,217 Selling, General and Other expense $ 2,266 $ 3,855 $ 4,429 $ 4,138 $ 4,636 $ 7,083 Operating Income $ (667) $ (1,632) $ (387) $ (69) $ 1,994 $ 6,523 Given information for Tesla: Cost of debt Tesla (from the footnotes to the financial statements) 3.31% Beta for Tesla (from Yahoo or other financial sources) 2.08 Normalized risk free rate of return in the market (observing the 10 rate on government issued securities) 3.98% Equity risk premium (from historical studies of the market) 5.00% Market value of debt (use book or amount disclosed in the footnotes if different) $ 3,099 Number of common shares outstanding 3,164 Market price of the common stock on July 13, 2022 $ 269.69 Market value of equity (number of shares times the stock price) Calculate the required return (weighted average cost of capital) Market Weights Component Weighted Values Cost Cost Debt Equity Required return (weighted average cost of capital)...................................... Calculate the Economic Profit (Economic Value Added) Year 2016 2017 2018 2019 2020 2021 Net Operating Assets $ 19,747 $ 24,940 $ 24,963 $ 28,447 $ 43,283 $ 47,803 times the required return Required income in dollars Year 2016 2017 2018 2019 2020 2021 Operating Income earned $ (667) $ (1,632) $ (387) $ (69) $ 1,994 $ 6,523 Less required income Economic profit or (loss) Another way to look at this: Return on invested capital -3.38% -6.54% -1.55% -0.24% 4.61% 13.65% Weighted average cost of capital Spread