Find the price and p and e ratio of the firm

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Reference no: EM131599794

Castles in the Sand generates a rate of return of 20% on its investments and maintains a plowback ratio of .50. Its earnings this year will be $4 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.)

Price $

P/E ratio

b. Find the price and P/E ratio of the firm if the plowback ratio is reduced to .40. (Do not round intermediate calculations. Round your answers to 2 decimal places.)

Price $

P/E ratio

Reference no: EM131599794

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