Use the Information for the Question(s)below

question 58

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.
-After the repurchase how many shares will Luther have outstanding?

• A)0.75 billion
• B)1.0 billion
• C)1.1 billion
• D)1.2 billion

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Definitions:

Weighted Average

A calculation that takes into account the varying degrees of importance of the numbers in a data set, assigning more weight to some numbers and less to others.

Earnings Per Share

A financial metric that measures the amount of a company's profit allocated to each outstanding share of its common stock.

Outstanding Common Stock

Shares of a corporation's stock that have been issued and are in the hands of investors, but not repurchased by the company.

Restricted Retained Earnings

Earnings that are not freely available for dividend distribution or other purposes due to legal or contractual restrictions.