Answer:
$1,290,000
Explanation:
Given that,
Cash flow to creditors = -$85,000
Cash flow to stockholders = $170,000
Firm’s net capital spending for 2018 = $1,250,000
Firm reduced its net working capital investment by $45,000
Cash Flow from Assets:
= Cash Flow to Creditor + Cash Flow to Stockholders
= -$85,000 + $170,000
= $85,000
Cash Flow from Assets = OCF - Net Capital Spending - Change in Net Working Capital
$85,000 = OCF - $1,250,000 - (-$45,000)
OCF = $85,000 + $1,250,000 - $45,000
= $1,290,000
To avoid the problem of having to forecast and discount an infinite number of dividends, we must require that the dividends start to grow at a fixed rate in the future.
<h3>What are dividends?</h3>
Dividends are payments made by a company to its shareholders. This money is taken from the total profits made by the company. The remaining money after the payment of dividends goes to re-investment in order to grow the company.
Therefore, we can confirm that in order to avoid the problems presented in the question regarding dividends, we must require that they grow at a fixed rate in the future.
To learn more about profit visit:
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The statement, "Common stock is a vehicle for selling ownership and another way to raise money for operations, expansion, or other business needs" is true.
<u>Explanation:</u>
Common stock is a distribution tool and a way to raise capital for investment, business growth or other company needs.
Common stock is a kind of company holding, a type of safety. In many other regions of the world, the terms polling share and prevalent share are frequently were using.
The "common stock" is used mainly in the USA. These are classified as shareholdings or common shares in the United Kingdom and other Commonwealth.
It means that one common stock share constitutes percentage equity of a corporation. In certain words, this is a way to split the assets of a corporation.
For example, if 100 shares were taken out, one share would amount to one percent of the company's intellectual property.
