Question
In: Finance
Zetatron is an all-equity firm with 230 million shares outstanding, which are currently trading for $12.83...
Zetatron is an all-equity firm with 230 million shares outstanding, which are currently trading for $12.83 per share. A month ago, Zetatron announced it will change its capital structure by borrowing $486 million in short-term debt, borrowing $ 504 million in long-term debt, and issuing $387 million of preferred stock. The $1 comma 377 million raised by these issues, plus another $ 87 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?
Solutions
Expert Solution
SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE
jeff jeffy answered 1 year agoRelated Solutions
Zetatron is an all-equity firm with 290 million shares outstanding, which are currently trading for $21.76...
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...
Zetatron is an all-equity firm with 270 million shares outstanding, which are currently trading for $16.62...
Zetatron is an all-equity firm with 270 million shares
outstanding, which are currently trading for $16.62 per share. A
month ago, Zetatron announced it will change its capital structure
by borrowing $672 million in short-term debt, borrowing $ 812
million in long-term debt, and issuing $636 million of preferred
stock. The $2 comma 120 million raised by these issues, plus
another $ 75 million in cash that Zetatron already has, will be
used to repurchase existing shares of stock. The...
?Zelnor, Inc., is an? all-equity firm with 180 million shares outstanding currently trading for $ 11.52...
?Zelnor, Inc., is an? all-equity firm with 180 million shares
outstanding currently trading for $ 11.52 per share. Suppose Zelnor
decides to grant a total of 18 million new shares to employees as
part of a new compensation plan. The firm argues that this new
compensation plan will motivate employees and is better than giving
salary bonuses because it will not cost the firm anything. Assume
perfect capital markets. a. If the new compensation plan has no
effect on the...
Kurz Manufacturing is currently an all-equity firm with 3535 million shares outstanding and a stock price...
Kurz Manufacturing is currently an all-equity firm with
3535
million shares outstanding and a stock price of
$ 11.50$11.50
per share. Although investors currently expect Kurz to remain
an all-equity firm, Kurz plans to announce that it will borrow
$ 45$45
million and use the funds to repurchase shares. Kurz will pay
interest only on this debt, and it has no further plans to
increase or decrease the amount of debt. Kurz is subject to a
38 %38%
corporate tax...
Kurz Manufacturing is currently an all-equity firm with 31 million shares outstanding and a stock price...
Kurz Manufacturing is currently an all-equity firm with 31
million shares outstanding and a stock price of $13.50 per share.
Although investors currently expect Kurz to remain an all-equity
firm, Kurz plans to announce that it will borrow $60 million and
use the funds to repurchase shares. Kurz will pay interest only on
this debt, and it has no further plans to increase or decrease the
amount of debt. Kurz is subject to a 25% corporate tax rate.
a. What...
Kurz Manufacturing is currently an all-equity firm with 38 million shares outstanding and a stock price...
Kurz Manufacturing is currently an all-equity firm with
38 million shares outstanding and a stock price of $14.50 per
share. Although investors currently expect Kurz to remain an
all-equity firm, Kurz plans to announce that it will borrow $35
million and use the funds to repurchase shares. Kurz will pay
interest only on this debt, and it has no further plans to
increase or decrease the amount of debt. Kurz is subject to a 30%
corporate tax rate.
a. What...
Kurz Manufacturing is currently an all-equity firm with 37 million shares outstanding and a stock price...
Kurz Manufacturing is currently an all-equity firm with
37
million shares outstanding and a stock price of
$11.50
per share. Although investors currently expect Kurz to remain
an all-equity firm, Kurz plans to announce that it will borrow
$65
million and use the funds to repurchase shares. Kurz will pay
interest only on this debt, and it has no further plans to
increase or decrease the amount of debt. Kurz is subject to a
38%
corporate tax rate.
a. What...
Kurz Manufacturing is currently an all-equity firm with 17 million shares outstanding and a stock price...
Kurz Manufacturing is currently an all-equity firm with 17
million shares outstanding and a stock price of $ 13.00 per share.
Although investors currently expect Kurz to remain an all-equity
firm, Kurz plans to announce that it will borrow $ 63 million and
use the funds to repurchase shares. Kurz will pay interest only on
this debt, and it has no further plans to increase or decrease the
amount of debt. Kurz is subject to a 40 % corporate tax...
Ashman Motors is currently an all-equity firm. It has two million shares outstanding, selling for $37...
Ashman Motors is currently an all-equity firm. It has two
million shares outstanding, selling for $37 per share. The
company has a beta of 0.9, with the current risk-free rate at
3.1% and the market premium at 7.6%. The tax rate is 25% for the
company. Ashman has decided to sell $37 million of bonds and
retire half its stock. The bonds will have a yield to maturity of
7.4%. The beta of the company will rise to 1.3 with...
Q1. An all-equity financed firm has 1 million shares outstanding, currently selling at $10 per share....
Q1. An all-equity financed firm has 1 million shares
outstanding, currently selling at $10 per share. It considers a
restructuring that would issue $4 million in debt to repurchase
400,000 shares. How does this affect overall firm
value?
Q2: What is the expected return on equity for a firm
with a 14% expected return on assets that pays 9% on its debt,
which totals 30% of assets?
Q3: What is the expected rate of return to shareholders
if the firm...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- D. Explain what it means for recommendations to be specific and actionable. E. Discuss how charts...
- Capital Toys’ management is considering eliminating product A, which has been showing a loss for several...
- Computer Networks IT 210 Please Use your own words . sorry No handwriting no copy paste...
- The Coronavirus will obviously impact the economy of big organizations like FIFA or the NBA but...
- Question: what is the difference between rights of assertion and observation assertion. Include which financial statements...
- how to read a csv file in php and make a html table? I can't use...
- ABC Inc. is evaluating a project that will increase annual sales by $230,000 and annual cash...
ADVERTISEMENT