The right side of the balance sheet shows the firms liabilities and stockholders equity.

Which of the following best describes shareholders equity?

Equity is the sum of what the initial stockholders paid when they bought company shares and the earnings that the company has retained over the years.

Equity is the difference between the paid-in capital and retained earnings.

NOW Inc. released its annual results and financial statements. Grace is reading the summary in the business pages of todays paper. In its annual report this year, NOW Inc. reported a net income of $132 million. Last year, the company reported a retained earnings balance of $561 million, whereas this year it increased to $660 million. How much was paid out in dividends this year?

$170 million

$5 million

$33 million

$231 million