Use the Information for the Question(s) Below

question 73

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 share 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.
-Assume that in addition to 1.25 billion ordinary shares outstanding, Luther has share options given to employees valued at $2 billion. After the repurchase how many shares will Luther have outstanding?

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

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Definitions:

Raw Material

Basic materials used in the production process, which are transformed into finished goods.

Property, Plant, and Equipment

Long-term assets, including land, buildings, machinery, and vehicles, used in the operation of a business.

Standard Cost Variances

The differences between the expected (standard) costs and the actual costs incurred for materials, labor, and overhead during a period.

Selling and Administrative Expenses

Overhead costs associated with the general operation of a company and the selling of goods or services, not directly tied to production.