ANSWER ONLY THE QUESTION E!!!!!!!!

The balance sheet for Zeta Corporation is shown below in market value terms. There are 1.000 shares outstanding. Market value balance sheet Cash 200 Equity 4200 Non-current assets 11000 Liabilities 7000 Total 11200 Total 11200

a. The company declared a cash dividend of 0.80 per share. It goes ex-dividend tomorrow. Ignoring any tax effects, what is the cumdividend price and the ex-dividend price?

Cum-dividend price = 4200/1000= 4.2 million.

Ex-dividend price= 4.2- 0.8= 3.4 million

b. What will the market value balance sheet look like after the dividends are paid?

Cash 200

Equity 3400

Non-Current Assets 11 000

Dividend Payable 800

Liabilities 7000

Total 11200 both sides.

When the dividend will be paid, the amount will be removed from the liabilities and adjusted to the asset side.

c. What if instead of cash dividend, the company has announced it is going to repurchase 800 million worth of equity. What effect will this transaction have on the equity of the firm? How many shares will be outstanding?

The share repurchase will reduce the equity and also deducted from the asset side. Return on asset and equity will both increase sustainability. The equity will be = 3400- 800= 2600 million.

d. What will the price per share be after the repurchase?

800/ 4,2 = 191 shares.

Remaining 809

Share price after buyback= 2600/ 809= 3.21 million.

e. Are the two strategies equivalent? Why, or why not?