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Webster United is paying a dividend of $1.09 per share today. There are 225,000 shares outstanding with a market price of $31.17 per share prior to the dividend payment. Ignore taxes. Before the dividend, the company had earnings per share of $2.11. As a result of this dividend, the:A) retained earnings will decrease by $225,000.
B) retained earnings will increase by $245,250.
C) total value of the company will not change.
D) earnings per share will increase to $3.20.
E) price-earnings ratio will be 14.26.

Respuesta :

Answer:

E) Price-earning ratio will be 14.26

Explanation:

Price-earning ratio: Evaluating the price of it's share with respect to it's earning per share.

Formula: [tex]PE = \frac{Market value per share}{Earning per share}[/tex]

Substituting values: [tex]PE = \frac{31.17-1.09}{2.11} = 14.26[/tex]

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