Peggy Grey\'s Cookies has net income of $310. The firm pays out 35 percent of th

Question

Peggy Grey's Cookies has net income of $310. The firm pays out 35 percent of the net income to its shareholders as dividends. During the year, the company sold $76 worth of common stock. What is the cash flow to stockholders?

$32.50

$184.50

$201.50

$108.50

$81.90

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Teddy's Pillows has beginning net fixed assets of $467 and ending net fixed assets of $542. Assets valued at $315 were sold during the year. Depreciation was $34. What is the amount of net capital spending?

$424

$109

$75

$41

$261

Peggy Grey's Cookies has net income of $310. The firm pays out 35 percent of the net income to its shareholders as dividends. During the year, the company sold $76 worth of common stock. What is the cash flow to stockholders?

Explanation / Answer

1.Cash flow to stockholders = Dividends paid – Net new equity

=108.5-76

=32.5

2.Net capital expenditures for a year equals purchases of new fixed assets plus upgrades to existing fixed assets minus sales of fixed assets. Add the increase in fixed assets to the increase in the accumulated depreciation to obtain net capital expenditures for the period.

542-467+34=109

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