Use the Information for the Question(s) Below

question 64

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) 1.15 billion
• B) 1.2 billion
• C) 0.75 billion
• D) 1.1 billion

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Definitions:

Gross Profit Percentage

A financial metric that represents the gross profit as a percentage of net sales, providing insight into the efficiency of a company's production and sales operations.

Selling Expenses

Costs associated with the selling of a property or product, including advertising, commissions, and legal fees, which may influence net profit or loss.

Related Party

Individuals or entities that are connected by relationships or other associations that might influence the financial transactions between them.

Loss Disallowed

A loss that cannot be deducted from taxable income due to tax rules or limitations.