Stockholders' equity of Afellay Corporation is as follows: Common stock, $5 par; issued and outstanding 150,000 shares: $5,280,000 Paid-in capital excess of par: $3,715,000 Retained earnings: $3,695,000 The current market price of Afellays stock is $32 per share. If Afellay declares and distributes a 35% stock dividend, retained earnings balance will be:

Multiple Choice

$2,625,000

$2,015,000

$2,277,500

$3,432,500