Question

Zetatron is an​ all-equity firm with 290 million shares​ outstanding, which are currently trading for ​$21.76 per share. A month​ ago, Zetatron announced it will change its capital structure by borrowing ​$857 million in​ short-term debt, borrowing $1023 million in​ long-term debt, and issuing ​$916 million of preferred stock. The ​$2796 million raised by these​ issues, plus another $84 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 Before this​ transaction?

Account Amount

Cash ________million (Round to 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. What is the market value of Zetaron After the new securities are issued but before the share​ repurchase?

Account Amount

Cash ________million (Round to 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)

C. What is the market value of Zetatron After the share​ repurchase?

Account Amount

Cash ________million (Round to 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)

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

Account Amount

Cash ________million (Round to 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)

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

_______Outstanding Shares

The price per share will be ________ (Round to 2 decimal places)

Answer 1

We can calculate the desired results as follows:

For part C all the cash amount available has been used to repurchase shares.

Formulas used in th excel sheet are:

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