All American National Company earned $240,000 last year. The board of directors decided to pay out one-half of the firm's earnings to the stockholders. Before the board's decision, the firm's retained earnings were $740,000. Which of the following statements is true?
A. Each shareholder will receive more than he or she received last year.
B. The firm's retained earnings are too high.
C. The value of the firm's retained earnings is now $860,000.
D. The value of the firm's retained earnings is now $620,000.
E. The firm should be more profitable.
Answer: C
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