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:

A)

Retained earnings will decrease by $350,000.

B)

Retained earnings will increase by $462,000.

C)

Total firm value will not change.

D)

Earnings per share will increase to $3.

E)

Price-earnings ratio will be 12.55.