Question

For the past year, LP Gas, Inc., had cash flow from assets of $38,100, of which $21,500 flowed to the firm's stockholders. The interest paid was $2,300. What is the amount of the net new borrowing?

Answer 1

The net new borrowing is $14,300.

Step-by-step explanation:

The net new borrowing can be calculated by subtracting the cash flow to the firm's stockholders and the interest paid from the cash flow from assets. In this case, the cash flow from assets is $38,100, the cash flow to the firm's stockholders is $21,500, and the interest paid is $2,300. Mathematically, it can be represented as:

Net New Borrowing = Cash Flow from Assets - Cash Flow to Stockholders - Interest Paid

Net New Borrowing = $38,100 - $21,500 - $2,300

Net New Borrowing = $14,300