Question
An investor estimates that next year's sales for Dursley's Hotels, Inc., should amount to about $99 million. The company has 2.8 million shares outstanding, generates
An investor estimates that next year's sales for Dursley's Hotels, Inc., should amount to about $99 million. The company has 2.8 million shares outstanding, generates a net profit margin of about 6.7%, and has a payout ratio of 47%. All figures are expected to hold for next year. Given this information, compute the following.
a. Estimated net earnings for next year.
b. Next year's dividends per share.
c. The expected price of the stock (assuming the P/E ratio is 21.7
times earnings).
d. The expected holding period return (latest stock price: $33.99 per share).
a. The estimated net earnings for next year is $6.6336.633 million.(Round to three decimal places.
b. The dividends per share for next year is $1.111.11. (Round to the nearest cent.
c. Assuming the P/E ratio is 21.7 times earnings, the expected price of the stock is $51.4151.41. (Round to the nearestcent.)
d. The expected holding period return is ____%. (Round to two decimal places.)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started