Question

Splish Corporation is authorized to issue 47,000 shares of $5 par value common stock. During 2025 , Splish took part in the following selected transactions.

a. Issued 4,800 shares of stock at $44 per share, less costs related to the issuance of the stock totaling $5,800.
b. Issued 1,100 shares of stock for land appraised at $47,000. The stock was actively traded on a national stock exchange at approximately $45 per share on the date of issuance.
c. Purchased 470 shares of treasury stock at $46 per share. The treasury shares purchased were issued in 2021 at $43 per share.
d. Retired the treasury shares purchased in part (c).

Answer 1

The case presented involves calculating the present value of future dividends expected from Babble, Inc. and determining the price per share by dividing the total present value by the number of shares available. The estimated price per share, given the provided dividends, is approximately $256,500.

Step-by-step explanation:

The question involves understanding and analyzing different stock trans actions that a company has taken part in. To find out what an investor would pay for a share of stock in Babble, Inc., one will need to calculate the present value of future dividends and then divide that by the number of shares available. Given the profits that are to be paid out at different times, one needs to discount those profits to their present values separately, assuming a certain interest rate. By adding together the present values, the total monetary amount available to be divided among the shareholders is determined. Then, one would divide by the total number of shares (200 in this case) to find the price per share. If the PDV of total profits is $51.3 million, each share would be worth approximately $256,500.