Develop a forecast of Tesla's sales revenue for the period 2023 - 2032. Be prepared to justify
Question:
Develop a forecast of Tesla's sales revenue for the period 2023 - 2032.
Be prepared to justify your forecast. Note that you are not required to
forecast other variables at this stage.
Assume that in a given year Tesla's sales increase from $200 billion to
$250 billion. Calculate the net capital expenditure and working capital
requirements this would generate if the company's Sales/Net PPE and
Working Capital/Sales ratios were 3.50 and 15.0% respectively?
Use the data in Exhibit 13 and the Hamada equation to estimate the asset
betas of the 'big ten' auto companies. Then use the median asset beta
and data on Tesla to calculate Tesla's equity beta.2
Use your estimate of Tesla's equity beta and the other data in the case to
estimate the WACC of Tesla. Use market value weights where possible.
How does this estimate of Tesla's WACC compare to the WACC
estimates of the other auto companies?