Scrugg and Kofi Inc. has net income of $781,470. the firm paysout 40 percent of...

Scrugg and Kofi Inc. has net income of $781,470. the firm pays out 40 percent of the net income to its shareholders as dividends. During the year, the company sold $120,361 worth of common stock. What is the cash flow to the stockholders? Group of answer choices

$432,949
$120,361
$348,521
$192,227
$589,243

Solutions

Expert Solution

Given

Net income = $ 781470

Dividend amount = 40% ( Net income)

= $ 781470*40%

= $ 312588

Hence Dividend amount is $ 312588

Company sold $ 120361 worth of common stock during the year

Cash flow to stock holders =Dividend paid - Stock issued+ repurchase of shares.

= $ 312588-$ 120361+$ 0

= $ 192227

Hence Cash flow to stockholders is $ 192227.So 4th option is correct.

jeff jeffy answered 2 years ago

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