An investor estimates that next year's sales for Dursley's Hotels, Inc., should amount to about $105 million. The company has 3.3 million shares outstanding, generates a net profit margin of about 8.8%, and has a payout ratio of 53%. 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. Note: EPS is an intermediate computation not required as an input below. However, round your computation of EPS to at least two decimal places. c. The expected price of the stock (assuming the P/E ratio is 20.5 times earnings). d. The expected holding period return (latest stock price: $37.25 per share). Note: The dividend will be paid during the holding period. Note: The dividend will be paid during the holding period.
An investor estimates that next year's sales for Dursley's Hotels, Inc., should amount to about $105 million. The company has 3.3 million shares outstanding, generates a net profit margin of about 8.8%, and has a payout ratio of 53%. 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. Note: EPS is an intermediate computation not required as an input below. However, round your computation of EPS to at least two decimal places. c. The expected price of the stock (assuming the P/E ratio is 20.5 times earnings). d. The expected holding period return (latest stock price: $37.25 per share). Note: The dividend will be paid during the holding period. Note: The dividend will be paid during the holding period.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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#4 investment
An investor estimates that next year's sales for Dursley's Hotels, Inc., should amount to about
$105
million. The company has
3.3
million shares outstanding, generates a net profit margin of about
8.8%,
and has a payout ratio of
53%.
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.
Note:
EPS is an intermediate computation not required as an input below. However, round your computation of EPS to at least two decimal places.c. The expected price of the stock (assuming the P/E ratio is
20.5
times earnings).d. The expected holding period return (latest stock price:
$37.25
per share).
Note:
The dividend will be paid during the holding period.
Note:
The dividend will be paid during the holding period.Expert Solution
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