Prior to 1 June 2020, the share capital of Jenkins' Ear Ltd consisted of 1,000,000 ordinary shares, issued at $2 each and fully paid. On 1 June, the directors of Jenkins' Ear Ltd decided to issue a share dividend. Existing shareholders are to receive one new share for every five shares held. The share issue is to be funded entirely from retained earnings. Each new share is valued at $3. How much cash will the company pay to fund the share dividend?

Nothing

$1 000 000

$2 000 000

$3 000 000