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
E)1.25 billion

Question

Quizplus · Accepted Answer

The repurchase of $2 billion worth of stock options will decrease the total value of Luther's outstanding shares by $2 billion. Since the total value of Luther's outstanding shares was previously 1.25 billion, after the repurchase the total value of Luther's outstanding shares will be $1.25 billion - $2 billion = -$0.75 billion, which is impossible. This means that some of Luther's outstanding shares will also be repurchased, decreasing the number of outstanding shares. The exact number of outstanding shares cannot be determined without more information about the current stock price, but of the answer choices given, the closest option is A) 1.0 billion.

Assume That in Addition to 1