Question

1. In 2019 Huber reported earnings per share (EPS) of $1.45 and it had 100,000 shares...

1. In 2019 Huber reported earnings per share (EPS) of $1.45 and it had 100,000 shares of common stock outstanding. If the firm paid common stock dividends of $1.00 per share, retained earnings would increase by ______. a. $175,000 b. $145,000 c. $125,000 d. $75,000 e. $45,000\

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Answer #1

Here,

EPS = $1.45

Shares of common stock outstanding = 100,000

Total earnings available for equity shareholders = 1.45 * 100,000

= 145,000 $

Firm paid dividend of 1 $ per share.

Total dividend paid = 1 * 100,000

= 100,000 $

Retained earnings = Total earnings available for equity shareholders - Total dividend paid

= 145,000 - 100,000

= 45000 $

Hence correct answer is e.

Hope it helps!

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