9. 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?
To find the cash flow to stockholders, we need to calculate the total amount distributed as dividends and the total amount received from selling the common stock.
First, let's calculate the amount distributed as dividends:
Dividends = Net income * Dividend percentage = $121,600 * 0.40 = $48,640
Next, we calculate the amount received from selling common stock:
Cash flow from selling stock = $75,000
The total cash flow to stockholders is the sum of the dividends and the cash flow from selling stock:
Cash flow to stockholders = Dividends + Cash flow from selling stock
Cash flow to stockholders = $48,640 + $75,000 = $123,640
Therefore, the cash flow to stockholders is $123,640.