Eaton Company has net income of $220,000. The firm pays out 40 percent of the net...

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Eaton Company has net income of $220,000. The firm pays out 40 percent of the net...

Eaton Company has net income of $220,000. The firm pays out 40 percent of the net income to its shareholders as dividends. During the year, the company sold $57,000 worth of common stock. What is the cash flow to stockholders?

		$28,800
		$29,400
		$30,060
		$31,000
		$32,000

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Answer 1

Answer #1

Dividend paid = net income *payout ratio

=220,000*40%

=$88,000

Cash received from sale of shares =$57,000

Hence, cash flow to shareholders = 88,000-57000

=$31,000

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Answer 2

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Eaton Company has net income of $220,000. The firm pays out 40 percent of the net...