Find the price and p-e ratio of the firm

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Castles in the Sand generates a rate of return of 14% on its investments and maintains a plowback ratio of .30. Its earnings this year will be $4 per share. Investors expect a 10% rate of return on the stock.

a. Find the price and P/E ratio of the firm. (Do not round intermediate calculations. Round your answers to 2 decimal places.)

  Price $   

  P/E ratio   

b. Find the price and P/E ratio of the firm if the plowback ratio is reduced to .20. (Do not round intermediate calculations. Round your answers to 2 decimal places.)

  Price $   

  P/E ratio

Reference no: EM131907922

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