Final answer:
The correct amount of cash invested by K. Spade in the company is $19,750, obtained in exchange for common stock. In a hypothetical related scenario, an investor would value a share of a company like Babble, Inc. based on the present value of expected future dividends.
Step-by-step explanation:
The amount of cash invested by K. Spade in the company in exchange for common stock is $19,750. This type of transaction represents an ownership investment, where an individual invests cash into a company and receives shares of stock representing partial ownership in return. If we consider a hypothetical example such as Babble, Inc., the calculation of the value of a share can be illustrated. If Babble, Inc. has profits of $15 million, $20 million, and $25 million over the next three years, respectively, and these are to be paid out as dividends evenly across 200 shares, an investor would determine how much to pay for a share based on the present value of these future dividend payouts. Each share would, therefore, receive dividends of $75,000 in the present, $100,000 after one year, and $125,000 after two years. Discounting these amounts to present value terms would provide the price an investor might be willing to pay per share.