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An investor estimates that next years sales for Dursleys Hotels Inc. should amount to about $100 million. The company has 5.0 million shares outstanding, generates
An investor estimates that next years sales for Dursleys Hotels Inc. should amount to about $100 million. The company has 5.0 million shares outstanding, generates a net profit margin of about 10%, and has a payout ratio of 50%. All figures are expected to hold for next year. Given this information, compute the following.
- Estimated net earnings for next year
- Next years dividends per share
- The expected price of the stock (assuming the P/E ratio is 24.5 times earnings)
- The expected holding period return (latest stock price: $40 per share)
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