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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:

  • Earnings per share will increase to $3.

  • Price-earnings ratio will be 12.55.

  • Total firm value will not change.

  • Retained earnings will increase by $462,000.

  • Retained earnings will decrease by $350,000.

Reference no: EM131434930

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