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Zetatron is an all-equity firm with 240 million shares outstanding, which are currently trading for $10.58 per share. A month ago, Zetatron announced it
Zetatron is an all-equity firm with 240 million shares outstanding, which are currently trading for $10.58 per share. A month ago, Zetatron announced it will change its capital structure by borrowing $299 million in short-term debt, borrowing $495 million in long-term debt, and issuing $452 million of preferred stock. The $1,246 million raised by these issues, plus another $25 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. What is the market value balance sheet for Zetatron i. Before this transaction? ii. After the new securities are issued but before the share repurchase? iii. After the share repurchase? b. At the conclusion of this transaction, how many shares outstanding will Zetatron have, and what will the value of those shares be? 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 Total Liabilities Total Equity EA EA $ million (Round to the nearest integer.) million (Round to the nearest integer.) million (Round to the nearest integer.)
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