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23 January, 10:01

Hurricane Industries had a net income of $143,450 and paid 45 percent of this amount to shareholders in dividends. During the year, the company sold $89,250 in new common stock. What was the company's cash flow to stockholders?

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  1. 23 January, 10:31
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    (-$24,697)

    Explanation:

    Given that,

    Net income = $143,450

    Dividend payout ratio = 45 percent

    company sold $89,250 in new common stock

    Total dividend:

    = Net income * Dividend payout ratio

    = $143,450 * 0.45

    = $64,553

    Therefore,

    Company's cash flow to stockholders:

    = Total Dividend - Net new equity raised

    = $64,553 - $89,250

    = (-$24,697)
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