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

---

Definitions:

Fixed Cost

Fixed costs are business expenses that remain constant regardless of the quantity of goods or services produced, such as rent or salaries.

Total Cost

The sum of fixed and variable costs incurred by a firm in producing and distributing a specified level of output.

Marginal Cost

The expenditure involved in fabricating one more unit of a product or service.

Average Total Cost

Average total cost is the total cost of production divided by the quantity of output produced, indicating the cost on a per-unit basis.