Use the Information for the Question(s)below

question 2

Multiple Choice

Use the information for the question(s) below.
Luther is a successful logistical services firm that currently has $5 billion in cash.Luther has decided to use this cash to repurchase shares from its investors,and has already announced the stock repurchase plan.Currently Luther is an all-equity firm with 1.25 billion shares outstanding.Luther's shares are currently trading at $20 per share.
-With perfect capital markets,what is the market value of Luther's equity after the share repurchase?

• A)$15 billion
• B)$10 billion
• C)$25 billion
• D)$20 billion

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Definitions:

Specific Performance

A legal remedy requiring a party to execute a contract according to its precise terms, typically applied in cases involving unique goods or property.

Compensatory Damages

Monetary compensation awarded to reimburse a plaintiff for actual losses suffered due to a defendant's wrongdoing.

Punitive Damages

Financial compensation awarded to a plaintiff to punish the defendant for egregious misconduct and deter future similar acts.

Mitigate Damages

A legal principle requiring a party suffering loss to take reasonable action to minimize the extent of the damage resulting from a breach of contract or tort.