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13 November, 20:28

The Daily News had net income of $121,600, of which, 40% was distributed to the shareholders as dividends. During the year, the company sold $75,000 worth of common stock. According to the cash flow from assets (CFFA), what is the cash flow to stockholders?

A. - $75,000

B. - $26,360

C. - $2,040

D. $123,640

E. $147,960

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Answers (1)
  1. 13 November, 20:44
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    B. - $26,360

    Explanation:

    Cash flow to stockholder's are net of cash inflow from stockholder's and outflow to the stockholder's.

    Cash flow to Stockholder's

    Cash inflows

    Cash from sale of common stock = $75,000

    Less: Cash outflows

    Dividend paid (121,600 x 40%) = $48,640

    Net Cash flow = $26,360

    So the net cash flow to stockholder's is $26,360.
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