You have recently been hired by Hasher Motors in its Finance department. Hasher Motors was founded eight years ago by Asher. Asher Smith found a method to manufacture a cheaper battery that will hold a larger charge, giving a car powered by the battery a range of 700 miles before requiring a charge. The cars manufactured by Hasher Motors are mid-sized and carry a price that allows the company to compete with other mainstream auto manufacturers. The company is privately owned by Asher Smith and his family, and it had sales of $97 million in 2020. Hasher Motors primarily sells to customers who buy the cars online, although it does have a limited number of company-owned dealerships. The customer selects any customization and makes a deposit of 20 percent of the purchase price. After the order is taken, the car is made to order, typically within 45 days. Hasher Motors growth to date has come from its profit. When the company had sufficient capital, it would expand production. Relatively little formal analysis has been used in its capital budgeting process. Asher Smith has just read about capital budgeting techniques and has come to you for help. For starters, the company has never attempted to determine its cost of capital, and Asher Smith, would like you to perform the analysis. Because the company is privately owned, it is difficult to determine the cost of equity for the company. Asher Smith, therefore, wants you to use pure play approach to estimate the cost of capital to Hasher Motors, and he has chosen Tesla Motors as a representative company.

The following questions will lead you through the steps to calculate this estimate: To estimate the cost of equity for Tesla, go to finance.yahoo.com and enter the ticker symbol TSLA. Follow the various links to find answers to the following questions: What is the most recent stock price listed for Tesla? What is the market value of equity, or market capitalization? How many shares of stock does Tesla have outstanding? What is the beta for Tesla? What is the most recent dividend? Refer to finance.yahoo.com and follow the Bonds link. What is the yield on 3-month Treasury bills? Using a historical market risk premium, what is the cost of equity for Tesla using the CAPM?