The Sailors Co. is paying a $2.00 per share dividend today. There are 200,000 shares outstanding with market price of $32 per share. Before the dividend, the company had earnings per share of $2.50. As a result of this dividend, the:
A) Retained earnings will decrease by $200,000.
B) Retained earnings will increase by $320,000.
C) Total firm value will not change.
D) Earnings per share will increase to $3.00.
E) Price-earnings ratio will be 12.
Correct Answer:
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