Valuation analysis - Cost of debt
Hello, As part of a project, I have to do a valuation analysis of a company, Tesla. It's a first for me so I got lost on something surely simple but that I can't get to find. I am currently looking for the cost of debt of the company. According to my book, I should find somewhere something like the file attached. (It's a bond table with the coupon rate, book value, percentage of total debt, market value, percentage of total, YTM, book values and market values)
I looked up on the 10k report from the SEC but I didn't see it. Did I just miss it or am I looking in the wrong place?
Thank you
http:// www. gurufocus. com /term/wacc/TSLA/Weighted-Average-Cost-Of-Capital-WACC/Tesla-Motors-Inc
Thank you for your answer! I found that earlier already but I need for my project to do it from scratch and find the data who leads to this result, show where I found the data and show my own calculations. I sadly simply use the result from there :(
Damodoran did a bunch of valuation stuff on tesla on his blog. Check it out.
I simply posted to like to show the formulas:
Interest Expense divided by the latest two-year average debt to get the simplified cost of debt.
Thank you both for your responses, they were highly useful :)
valuation/accounting for debt question (Originally Posted: 12/27/2012)
Hey all.
Quick question. When youre calculating the EV of a company, do you use par/book value of debt or market value?
Eg. Equity of 100m, debt on bs of 120 trading at 50, EV is 160 or 220?
If you're purchasing a company in an LBO then you need to refinance the debt at 101 (use this?).
Otherwise, if EV is x but you have to raise y to refinance the company how to you account for this? It's like a goodwill of debt..
Clearly I am very naive on the topic. Any help appreciated.
Thanks
Market value.
but if you're going to buy this beast you'll be trying to ascertain how much you're going to have to spend to buy it, so you'd need to decide how you're going to buy it (out of bankruptcy or not) and as a result if you'll have to pay contracted amounts (e.g. your 101 call price) or its sale price out of bankruptcy.
So it's not black and white. . Market value for comps (whats the rationale?) and refinancing cost for buyout analysis?
because the price of the debt has decreased due to the perception that the business is valued at that level, and hence, when you're looking for comps this works for your purpose (finding the value of peers). but if you actually have to buy it, then things, as you will find out if you work in finance, get a lot more complex and nuanced as actual money changes hands.
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