Question: Exercise 8A: Perform an EPS/EBIT Analysis for Tesla Instructions Amount Tesla needs: $10,000 million to build four new manufacturing plants outside the United States Interest

Exercise 8A: Perform an EPS/EBIT Analysis for Tesla

Instructions

Amount Tesla needs: $10,000 million to build four new manufacturing plants outside the United States

  • Interest rate: 2.99%

  • Tax rate: 15.27%

  • Stock price: $84.90 as of January 2, 2020

  • Number of shares outstanding: 1083 million

  • EBIT: Pessimistic: $2,000 million, Realistic: $5,000 million, Optimistic: $10,000 million

Steps

  1. Prepare an EPS/EBIT analysis for Tesla. Determine whether the company should use all debt, all stock, or a 50-50 combination of debt and stock to finance this market-development strategy.

  2. Develop an EPS/EBIT chart after completing the EPS/EBIT table.

  3. Next, give a three-sentence recommendation for Tesla CFO.

  4. In 50-100 words, provide a summary recommendation/analysis overview for this part

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