You have recently been hired by Swan Motors, Inc. (SMI), in its relatively new treasury management department. SMI was f

[answerhappygod]

You have recently been hired by Swan Motors, Inc. (SMI), in its
relatively new treasury management department. SMI was founded 8
years ago by Joe Swan. Joe found a method to manufacture a cheaper
battery with much greater energy density than was previously
possible, giving a car powered by the battery a range of 700 miles
before requiring a charge. The cars manufactured by SMI are
midsized and carry a price that allows the company to compete with
other mainstream auto manufacturers. The company is privately owned
by Joe and his family, and it had sales of $97 million last
year.
SMI primarily sells to customers who buy the cars online,
although it does have a limited number of company-owned
dealerships. Most sales are online. 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. SMI’s growth to date has come from its
profits. When the company had sufficient capital, it would expand
production. Relatively little formal analysis has been used in its
capital budgeting process. Joe 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 Joe 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. Joe wants you to use the pure play approach to
estimate the cost of capital for SMI, and he has chosen Tesla
Motors as a representative company. The following questions will
lead you through the steps to calculate this estimate.
1. Most publicly traded corporations are required to submit 10-Q
(Quaterly) and 10-K (Annual) reports to the SEC detailing their
financial operations over the previous quarter of year,
respectively. Look on the balance sheet to find the book value of
debt and the book value of equity. If you Look further down
the report the report, you should find a section titled either
"Long-term Debt" or "Long-Term Debt and Interest Rate Risk
Management" that will list a break down of Tesla's long term
Debt.
(Balance Sheet is in page 49 of this link below)
https://www.sec.gov/ix?doc=/Archives/ed ... nce_sheets