Cryptic Corporation Has 10 Million Shares of Stock Outstanding

Multiple Choice

Cryptic Corporation has 10 million shares of stock outstanding.Cryptic's after-tax profits are $140 million and the corporation's stock is selling at a price-earnings multiple of 18,for a stock price of $252 per share.Cryptic's management issues a 40% stock dividend.What is the effect on an investor who owns 100 shares of Cryptic before the dividend if Cryptic's price-earnings multiple remains the same after the dividend is paid?

A) The investor will own 140 shares worth $25,200.
B) The investor will own 140 shares worth $35,280.
C) The investor will own 100 shares worth $25,200.
D) The investor will own 100 shares worth $35,280.