Webster United is paying a dividend of $1.32 per share today. There are 350,000 shares outstanding with a market price of $22.40 per share prior to the dividend payment. Ignore taxes. Before the dividend, the company had earnings per share of $1.68. As a result of this dividend, the:

A). Retained earnings will decrease by $350,000.
B). Retained earnings will increase by $462,000.
C). Total firm value will not change.
D). Earnings per share will increase to $3.
E). The Price-earnings ratio will be 12.55.

Answer rating: 100% (QA)

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