Use the Information for the Question(s)below

question 82

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

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

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Definitions:

Gum

A soft, cohesive substance designed for chewing, made from the sap of certain trees or synthesized materials.

Candy

A sweet tasting confection made from sugar and often combined with fruits, chocolate, or nuts.

Behavioral Economic Theories

A branch of economics that studies how psychological, social, and emotional factors affect economic decisions.

Rational Decisions

Choices made based on logical reasoning and objective analysis of available information and alternatives.