Final answer:
An investor would consider the present value of expected dividends from Babble, Inc. to determine the price they're willing to pay for a share. Without a given discount rate, the simple sum of $60 million in expected profits distributed over 200 shares results in a dividend value of $75,000 per share, which would influence the share's market price.
Step-by-step explanation:
When determining what an investor will pay for a share of stock in a company such as Babble, Inc., the future profits expected to be paid out as dividends are considered. Since Babble, Inc. expects to make profits of $15 million immediately, $20 million one year from now, and $25 million two years from now, and since these profits will be distributed as dividends among the 200 shares of the company, we calculate the value of each share based on the present value of these future dividends.
To find the present value of the dividends, you would typically discount future payments back to their value today at a given required rate of return. However, as the specific discount rate is not provided in the question, we will simply assign the totals to each of the 200 shares. Therefore, an investor would receive dividends worth $75,000 per share over the two years ($15 million + $20 million + $25 million divided by 200 shares). An investor may therefore be willing to pay a price close to this amount per share, depending on their required rate of return.