+1-415-670-9189
info@expertsmind.com
What is the weighted average cost of debt
Course:- Accounting Basics
Reference No.:- EM131722889




Assignment Help
Assignment Help >> Accounting Basics

QUESTIONS -

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 website. Go to the SEC website, follow the "Search for Company Filings" link, and search for SEC filings made by Tesla Motors (TSLA). Find the most recent JOQ or l0K, 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 TSLA, 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 TSLA? What is the market value of equity, or market capitalization? How many shares of stock does TSLA have outstanding? What is the most recent annual dividend? Can you use the dividend discount model in this case? What is the beta for TSLA? 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 TSLA using CAPM?

3. You now need to calculate the cost of debt for TSLA. Go to finramarkets.morningstar website enter ISLA as the company, and find the yield to maturity for each of TSLA's bonds. What is the weighted average cost of debt for TSLA 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 TSLA. Calculate this using book value weights and market value weights, assuming TSLA has a 35 percent marginal tax rate. Which number is more relevant?




Put your comment
 
Minimize


Ask Question & Get Answers from Experts
Browse some more (Accounting Basics) Materials
What are the income and FICA tax consequences if $325,000 is determined to be excessive wages by the IRS? Assume Joe is in the 35 percent marginal tax bracket and JS Corpora
The fundamental qualitative characteristics that make accounting information useful are relevance and verifiability-Relevant information only has predictive value, confirmator
Purchase Commitments Prophet Company signed a long-term purchase contract to buy timber from the U.S. Forest Service at $300 per thousand board feet. Under these terms, Prophe
A business is purchased for 250,000. The fair market value of assets are equipment 90,000, building 135,000, and goodwill 15,000. What is the cost basis for each asset?
A total of $ 50,000 was billed to the General Fund and collected 30 days later. Prepare the journal entries necessary to record these transactions, and label the fund( s) us
Allen Lumber Company had earning after taxes of $580,000 in the year 2006 with 400,000 shares outstanding. On January 1, 2007 the firm issued $35,000 new shares. Because of
Select the formula you will use to calculate the prepaid insurance balance at December 31, 2009. Then enter the amounts and calculate the balance. Round your answer to the n
On July 1, 2014, Ambrose was admitted to partnership in the firm of Ambrose & Nectar. His contribution to capital consisted of 500 shares of stock in Paniculata Corporation