An investor has estimated that next year's sales for Pagoda Hotel will be RM100 million. Pagoda Hotel has 5 million shares outstanding. It generates a net profit margin of about 10%, and has a dividend pay-out ratio of 50%. Interest expense is RM10 million, taxes RM10 million, depreciation RM15 million, and amortisation about RM5 million. All amounts are expected to remain the same next year. Required: With the above information, calculate 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 24.5 times of earnings). (d) The expected total return in percentage (latest stock price: RM40 per share). (e) The expected price – to - cash – flow ratio for next year.

An investor has estimated that next year's sales for Pagoda Hotel will be RM100 million. Pagoda Hotel has 5 million shares outstanding. It generates a net profit margin of about 10%, and has a dividend pay-out ratio of 50%. Interest expense is RM10 million, taxes RM10 million, depreciation RM15 million, and amortisation about RM5 million. All amounts are expected to remain the same next year. Required: With the above information, calculate 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 24.5 times of earnings). (d) The expected total return in percentage (latest stock price: RM40 per share). (e) The expected price – to - cash – flow ratio for next year.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter23: Corporate Restructuring

Section: Chapter Questions

Problem 10P

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