Question

Net new equity is equal to _____________.

	a.	The dollar value of equity sales minus any equity repurchases.
	b.	The dollar value of equity sales plus retained earnings minus dividends paid.
	c.	The dollar value of equity sales plus retained earnings.
	d.	The dollar value of equity sales plus dividends paid.
	e.	The dollar value of equity sales plus retained earnings plus dividends paid.

Cash flow from assets is best described as:

	a.	A firm's interest payments to creditors less net new borrowings.
	b.	Operating cash flows.
	c.	The sum of cash flow to bondholders and shareholders
	d.	Dividends paid out by a firm less net new equity raised.
	e.	The net difference between total assets and total liabilities.

Answer 1

Solution Q1:-

Option :- (B) i.e. The dollar value of equity sales plus retained earning minus dividends paid.

Reason / Explanation:-

  As Net new equity

Value of Equity Sale = xx

(+) Retained Earning = xx

(-) Dividend Paid = xx

Solution Q2:-

Option :- (C) i.e. The sum of cash flow to bondholders and shareholders.

Reason / Explanation:-

As, Cash flow from Assets = Cash Flow to Bondholders + Cash Flow to Shareholders

Here, Cash Flow to Bondholders = Interest - Net new Borrowing

Cash Flow to Shareholders = Dividend - Net new Equity issued