Market Capitalization

You have recently been hired by Swan Motors that sells mid-priced cars, and have been tasked to determine its cost of capital. Because the company is privately owned, you decided to use the pure play approach. You have identified Tesla Motors as a representative company in this industry. The following questions will lead you through the steps to calculate this estimate. 1. Most publicly traded corporations are required to submit quarterly (10Q) and annual reports (10K) to the SEC detailing the financial operations of the company over the past quarter or year, respectively. These corporate filings are available on the SEC Web site at www.sec.gov. Go to the SEC Web site; follow the “Search for Company Filings” link and the “Companies & Other Filers” link; enter “Tesla Motors”; and search for SEC filings made by Tesla Motors. 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. 2. To estimate the cost of equity for Tesla Motors, go to finance.yahoo.com and enter the ticker symbol TSLA. Follow the links to answer the following questions: What is the most recent stock price listed for Tesla Motors? What is the market value of equity, or market capitalization? How many shares of stock does Tesla have outstanding? What is the most recent annual dividend? Can you use the dividend discount model in this case? What is the beta? Now go back to finance.yahoo.com and 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 Tesla Motors using CAPM? 3. You now need to calculate the cost of debt for Tesla Motors. Go to finra-markets.morningstar.com, enter TSLA to get company information, and click bond issues. Under bond issues, click for more bond information to find the yield to maturity for each of Tesla’s bonds. What is the weighted average cost of debt for Tesla Motors 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? 4. You now have all the necessary information to calculate the weighted average cost of capital for Tesla Motors. Calculate this using book value weights and market value weights, assuming a 35 percent marginal tax rate. Which number is more relevant? 5. You used Tesla Motors as a pure play company to estimate the cost of capital for Swan Motors. Are there any potential problems with this approach in this situation?

Struggling to find relevant content? Order a custom essay on
Market Capitalization
Let our experts save you the hassle
Order Now
Calculate the price
Make an order in advance and get the best price
Pages (550 words)
$0.00
*Price with a welcome 15% discount applied.
Pro tip: If you want to save more money and pay the lowest price, you need to set a more extended deadline.
We know how difficult it is to be a student these days. That's why our prices are one of the most affordable on the market, and there are no hidden fees.

Instead, we offer bonuses, discounts, and free services to make your experience outstanding.
How it works
Receive a 100% original paper that will pass Turnitin from a top essay writing service
step 1
Upload your instructions
Fill out the order form and provide paper details. You can even attach screenshots or add additional instructions later. If something is not clear or missing, the writer will contact you for clarification.
Pro service tips
How to get the most out of your experience with GPA Fix
One writer throughout the entire course
If you like the writer, you can hire them again. Just copy & paste their ID on the order form ("Preferred Writer's ID" field). This way, your vocabulary will be uniform, and the writer will be aware of your needs.
The same paper from different writers
You can order essay or any other work from two different writers to choose the best one or give another version to a friend. This can be done through the add-on "Same paper from another writer."
Copy of sources used by the writer
Our college essay writers work with ScienceDirect and other databases. They can send you articles or materials used in PDF or through screenshots. Just tick the "Copy of sources" field on the order form.
Testimonials
See why 20k+ students have chosen us as their sole writing assistance provider
Check out the latest reviews and opinions submitted by real customers worldwide and make an informed decision.
Business and administrative studies
GOOD
Customer 452813, June 30th, 2022
Classic English Literature
Nicely done. Ty. Worth every penny.
Customer 452455, June 6th, 2021
Other
Thank you for a well written paper!!!
Customer 452557, January 19th, 2022
Psychology
Good mastery of ABA concepts. Excellent!
Customer 452469, May 14th, 2022
Nursing
Amazing work! I passed the assignment!
Customer 452707, August 20th, 2022
Nursing
Excellent PowerPoint! Thank you!
Customer 452707, June 29th, 2022
Nursing
Thank you!!!
Customer 452557, June 26th, 2021
Psychology
Thank you so very much!!!
Customer 452517, May 11th, 2021
Philosophy
i got the paper a bit late but it is good quality will for sure come back and use this website.
Customer 452611, September 9th, 2021
Social Work and Human Services
Thank you for the great job
Customer 452469, February 3rd, 2021
Nursing
Always perfect!!! Don is the best!
Customer 452453, July 27th, 2021
Nursing
Thank you for the outstanding work .
Customer 452635, June 5th, 2022
11,595
Customer reviews in total
96%
Current satisfaction rate
3 pages
Average paper length
37%
Customers referred by a friend
OUR GIFT TO YOU
15% OFF your first order
Use a coupon FIRST15 and enjoy expert help with any task at the most affordable price.
Claim my 15% OFF Order in Chat
error: Content is protected !!