Question

A company issues $1 million of new stock and pays $200,000 in cash dividends during the year. In addition, the company took advantage of falling interest rates to borrow $1.5 million in a new bond issue and paid off existing bonds with a face value of $2 million. The company bought 500 of another company's $1,000 bonds at a $100,000 premium. The net cash flow provided by financing activities is:

A) An inflow of $500,000.

B) An outflow of $200,000.

C) An outflow of $100,000.

D) An inflow of $300,000.

Answer

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