Question: This year, Ferris Co. is expected to earn a net profit of $8,500,000. Based upon this expectation, the Board of Directors has instructed management to

This year, Ferris Co. is expected to earn a net profit of $8,500,000. Based upon this expectation, the Board of Directors has instructed management to increase Retained Earnings by $4,500,000 (without issuing or retiring any stock). The company currently has 2,000,000 shares outstanding with a current market value of $20 per share. The book value per share of stock is $12. What is the maximum dividend (per share) that can be paid to shareholders, yet still satisfy the Boards directive to increase Retained Earnings for the year?

Group of answer choices

$3.50/Share

$2.00/Share

$4.50/Share

$7.00/Share

$1.50/Share

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