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Zetatron is an? all-equity firm with 300 million shares? outstanding, which are currently trading for ?$6.26 per share. A month? ago, Zetatron announced it will change its capital structure by borrowing ?$196 million in? short-term debt, borrowing $ 286 million in? long-term debt, and issuing ?$309 million of preferred stock. The $791 million raised by these? issues, plus another $ 38 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?
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