Question

During 2018, Jetson declared and paid cash dividends of $45M. The company also declared and issued a stock dividend. No other changes occurred in shares outstanding during 2018. What was Jetson's net income for 2018?

Answer 1

There is insufficient information to calculate Jetson's net income for 2018 based on the given data about dividends alone. For Babble, Inc., an investor would calculate the present value of expected dividends and divide by the number of shares to determine the price per share.

Step-by-step explanation:

The question pertains to the determination of Jetson's net income for the year 2018 based on the information provided about dividends. However, with the given data, it is not possible to accurately calculate the net income as the amount of the stock dividend is unknown, and net income is not solely derived from dividend payments. Net income is calculated as revenues minus expenses, taxes, and costs, and the declaration and payment of cash and stock dividends provide information only about the distribution of earnings, not the earnings themselves.

To answer the hypothetical scenario involving Babble, Inc., investors would calculate the present value of the future dividends that are expected to be paid out. Since Babble, Inc. plans to pay $15 million immediately, $20 million after one year, and $25 million after two years, the present value of these payments would be calculated based on a chosen discount rate, and then divided by the number of shares (200) to determine the price per share an investor might pay.