Zetatron is anall-equity firm with 220 million sharesoutstanding, which are currently trading for $15.66 per share. A monthago, Zetatron announced it will change its capital structure by borrowing $581 million inshort-term debt, borrowing $609 million inlong-term debt, and issuing $650 million of preferred stock. The $1,840 million raised by theseissues, plus another $39 million in cash that Zetatron alreadyhas, 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 thistransaction?

ii. After the new securities are issued but before the sharerepurchase?

iii. After the sharerepurchase?

b. At the conclusion of thistransaction, how many shares outstanding will Zetatronhave, and what will the value of those sharesbe?