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28 September, 03:39

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

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  1. 28 September, 03:51
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    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
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