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Castles in the Sand generates a rate of return of 20% on its investments and maintains...

Castles in the Sand generates a rate of return of 20% on its investments and maintains a plowback ratio of .30. Its earnings this year will be $5 per share. Investors expect a 15% 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.)

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.)

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jeff jeffy answered 8 months ago
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