Peggy Grey's Cookies has net income of $360. The firm pays out 40% of the net income to its shareholders as dividends. During the year,the company sold $80 worth of common stock. What is the cash flow to stockholders?
A) $64
B) $136
C) $144
D) $224
E) $296

Question

Quizplus · Accepted Answer

The cash flow to stockholders is the sum of dividends paid and the net proceeds from the sale of common stock. Dividends paid are 40% of net income, which is $360 * 0.40 = $144. The net proceeds from the sale of common stock are $80. Therefore, the cash flow to stockholders is $144 + $80 = $224.

Peggy Grey's Cookies Has Net Income of $360