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The Daily News had net income of $121,600 of which 40 percent was distributed to the shareholders as dividends. During the year, the company sold $75,000 worth of common stock. What is the cash flow to stockholders?

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pedrocarratore

Answer:

-$26,960

Explanation:

The cash flow to stockholders of The daily news is determined as the percentage of the net income that was distributed to shareholders (40% of $121,600), subtracted by the new equity incurred by selling $75,000 worth of common stock. The cash flow is:

[tex]C = \$121,600*0.40-\$75,000\\C=-\$26,960[/tex]

The cash flow to stockholders is -$26,960.

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