Hurricane Industries had a net income of $129,650 and paid 40 percent of this amount to shareholders in dividends. During the year, the company sold $80,250 in new common stock. What was the company's cash flow to stockholders?

a. 28390

b. 49400

c. - 28390

d. 51860

Question

Theresa Gay

Business

4 October, 23:30

Hurricane Industries had a net income of $129,650 and paid 40 percent of this amount to shareholders in dividends. During the year, the company sold $80,250 in new common stock. What was the company's cash flow to stockholders?

a. 28390

b. 49400

c. - 28390

d. 51860

+3

Answers (2)

Know the Answer?

Hood · Answer 1

a. 28390

Explanation:

Stockholders cash flow is the net of cash inflows from stockholders and cash outflows to stockholders.

Net Income = $129,650

Payout Ratio = 40%

Cash outflow

Amount of Dividend Paid = $129,650 x 40% = $51,860

Cash Inflow

Common stock issue = $80,250

Net Stockholder's cash flow = $80,250 - $51,860

Net Stockholder's cash flow = $28,390

Ashtyn Bautista · Answer 2

C. - 28390

Explanation:

The formula for calculating cash flow to share holders is

CFS = dividends paid - net new equity raised

dividends = 129650 * 0.4 = 51860

new common stock = 80250

CFS = 51860 - 80250 = -28390

Hurricane Industries had a net income of $129,650 and paid 40 percent of this amount to shareholders in dividends. During the year, the company sold $80,250 in new common stock. What was the company's cash flow to stockholders?a. 28390b. 49400c. - 28390d. 51860

Hurricane Industries had a net income of $129,650 and paid 40 percent of this amount to shareholders in dividends. During the year, the company sold $80,250 in new common stock. What was the company's cash flow to stockholders?

a. 28390

b. 49400

c. - 28390

d. 51860