Final answer:
The maximum amount for cash dividends is linked to Orville Corporation's unrestricted retained earnings, cash, and accounts payable, while an investor in Babble, Inc. would pay for a share based on the present value of expected future dividends.
Step-by-step explanation:
The student is asking about the maximum amount that can be used for cash dividends from Orville Corporation's financial position on September 1, Year 1. To determine this amount, we must consider both the unrestricted retained earnings and any liquidity constraints, such as cash on hand and outstanding liabilities like accounts payable.
In the case of Babble, Inc., an investor would assess the value of a share of stock based on the present and future dividends. Since profits will be paid as dividends, an investor calculates the present value of these future cash flows. The company has 200 shares of stock, and with profits of $15 million, $20 million, and $25 million expected over the next two years, these amounts are divided by the number of shares to establish the per-share dividend each year. However, since the question does not provide a discount rate for the present value calculation, we cannot determine the exact price an investor will pay for a share without assuming a discount rate.