Question

Peggy Grey's Cookies has net income of $350. 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

Answer 1

Answer:

The cash flow to the stockholders is $60.

Explanation:

Given that:

Total income = $350

Payout ratio = 40%

Dividend payment = 350 * 40%

= $140

Value of shares issued = $80

Cash flow to stockholders = 140 - 80

= $60

Thus, the cash flow to stockholders is $60