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determine the cost of debt, cost of preferred stock, cost of common equity, capital structure, and...

determine the cost of debt, cost of preferred stock, cost of common equity, capital structure, and the weighted average cost of capital (WACC) for your assigned publicly-traded company TESLA using Yahoo Finances

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Answer #1

1. Cost of debt for the tesla is 16% as pe the overall debt capital in the overall capital structure.

After tax cost of debt=16%[1-.3]=11.2%

2. Cost of preferred stock is arrived at almost 12% after adjustment of the beta and the the risk-free rate

3. Cost of equity has been ascertained at 15% after adjustment of beta along with risk premium after computing through Capital Asset pricing model.

4. Capital structure for Tesla is 70% debt capital 30% equity capital.

5. WACC= ( .7*11.2)+(15%*.28)+(.02*12%)

=(7.84+4.2+.24)

=12.4%

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