Peggy Grey's Cookies has net income of $360.The firm pays out 40 percent 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?

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, or $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