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Valuation of capital

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CBA Inc has 250,000 shares outstanding with a $5 par value. The shares were issued for $14. The stock is currently selling for $34. CBA has $5,000,000 in retained earnings and has declared a stock dividend that will increase the number of outstanding shares by 6%. What will be the capital in excess of par account after the stock dividend?
$7,685,000
$2,685,000
$810,000
$2,385,000

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Solution Summary

The answer contains the computation of capital after stock dividend when share premium is given.

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