Milliken Company paid $2.2 million to purchase stock in another company, $1.0 million to repurchase treasury shares, $.5 million to buy short-term investments, sold used equipment for $.8 million when its book value was $.6 million, and purchased new equipment for $3.4 million. What was the net cash flow from investing activities?

Question

Quizplus · Accepted Answer

- $2.2 million payment for purchase of stock in another company is a cash outflow from investing activities.
- $1.0 million payment for repurchase of treasury shares is a cash outflow from financing activities, not investing activities.
- $.5 million payment to buy short-term investments is a cash outflow from investing activities.
- $.8 million received from sale of used equipment is a cash inflow from investing activities.
- $3.4 million payment for purchase of new equipment is a cash outflow from investing activities.
Net cash flow from investing activities = (-$2.2 million) + (-$.5 million) + ($.8 million) + (-$3.4 million) = -$5.3 million, which is a net cash outflow. Therefore, the correct answer is B.

Milliken Company Paid $2