Question

# Zetatron is an all-equity firm with 100 million shares outstanding, which are currently trading for

$24.61 per share. A month ago, Zetatron announced it will change its capital structure by borrowing $279 million in short-term debt, borrowing $ 370 million in long-term debt, and issuing $404 million of preferred stock. The $1 comma 053 million raised by these issues, plus another $ 92 million in cash that Zetatron already has, will be used to repurchase existing shares of stock. The transaction is scheduled to occur today. Assume perfect capital markets.

**a.i.** What is the market value balance sheet for Zetatron before this transaction?

**Account Amount**

Cash $ __________million (Round to the nearest integer.)

Non-Cash Assets $___________million (Round to the nearest integer.)

Total Assets $ ____________million (Round to the nearest integer.)

Total Liabilities $ _____________million (Round to the nearest integer.)

Total Equity $ __________million (Round to the nearest integer.)

**a.ii.** What is the market value balance sheet for Zetatron after the new securities are issued but before the share repurchase?

**Account Amount**

Cash $ ____________million (Round to the nearest integer.)

Non-Cash Assets $ _____________million (Round to the nearest integer.)

Total Assets $ ___________million (Round to the nearest integer.)

Total Liabilities $ ___________million (Round to the nearest integer.)

Total Equity $___________ million (Round to the nearest integer.)

**a.iii.** What is the market value balance sheet for Zetatron after the share repurchase?

**Account Amount**

Cash $ ___________million (Round to the nearest integer.)

Non-Cash Assets $ _________million(Round to the nearest integer.)

Total Assets $ _________ million (Round to the nearest integer.)

Total Liabilities $ _________million (Round to the nearest integer.)

Total Equity $ _________million (Round to the nearest integer.)

**b.** At the conclusion of this transaction, how many shares outstanding will Zetatron have, and what will the value of those shares be?

At the conclusion of this transaction, the number of shares outstanding Zetatron will have is

million (Round to two decimal places.)

The price per share will be $ ____________(Round to two decimal places.)

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