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 price per share of Luther's stock after the share repurchase?
A) $20
B) $24
C) $15
D) $25

Question

Quizplus · Accepted Answer

D) Market price per share = (1.25 billion × $20 per share) / 1 billion shares
= $25 billion / 1 billion shares = $25

Use the Information for the Question(s) Below