Metromat Has the Following Equity Accounts on Its Balance Sheet

question 152

Multiple Choice

Metromat has the following equity accounts on its balance sheet: The current market price of Metromat's shares is $16. If the firm declares a 15% stock dividend and a $.15 per share cash dividend, what will be the impact on the paid in excess account? Assume a marginal tax rate of 40%.

• A)Decreases $2.56 million
• B)Increases $5.04 million
• C)Increases $5.76 million
• D)Does not change

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