Answer:
d) the value of the firms retained earnings is now $860,000
Explanation:
If All American National Company earned $240,000 last year, and the board of directors decided to pay out one-half of the firm's earnings to the stockholders.
That implies that dividends of $120,000 will be paid out (50% x $240,000) while the balance $120,000 will be retained in the company
Hence, if before the board's decision, the firm's retained earnings were $740,000. Then thereafter, the figure will include the $120,000 that will be retained from profits after dividend payout.
$740,000 + $120,000 = $860,000
