Metromat Has the Following Equity Accounts on Its Balance Sheet

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