Optimizing Tesla's Capital Structure: Assessing Value and Risk under the Optimal Capital Structure Framework
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Qi Ye
College:
College of Business and Public Management
Major:
Accounting
Faculty Research Advisor(s):
Huaibing Yu
Abstract:
This research aims to analyze the impact of different capital structures on the valuation and risk profile of Tesla, Inc. Using the Optimal Capital Structure (OCS) framework, the study will assess various combinations of debt and equity financing to determine the capital structure that maximizes Tesla's value while minimizing its cost of capital and financial risk. The research will employ financial modeling techniques to estimate Tesla's enterprise value, cost of capital, and stock price under different capital structure scenarios. Additionally, the study will evaluate the implications of the optimal capital structure on Tesla's financial flexibility, growth prospects, and ability to navigate market uncertainties. By shedding light on the significance of capital structure decisions, this research will contribute to a deeper understanding of corporate finance theory and practice, especially within dynamic and transformative industries like electric vehicles and renewable energy. Furthermore, it will provide valuable insights for investors, policymakers, and corporate leaders regarding the implications of capital structure choices on firm value creation and long-term financial viability.