John and Randy form a company with assets worth $900. They each have two shares of stock. The firm sells Cheri a warrant for one share of stock. The warrant has an exercise price of $200 and expires in one year. In one year, the firm's assets are worth $1,200 immediately before expiration of the warrant. Should Cheri exercise the warrant?

A)	We can't tell without knowing what she paid for the warrant.

B)	Yes, because she stands to gain $40 by exercising.

C)	Yes, because she stands to gain $100 by exercising.

D)	No, because the option is out of the money.

CORRECT ANSWER

E)	Yes, because she stands to gain $80 by exercising.

I would like to know why E is the right answer. Thank you.