Find the price and P-E ratio of the firm

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Reference no: EM131338168

Castles in the Sand generates a return on equity of 5.80% (i.e.. ROE) and maintains a plowback ratio of 42.50%. Its earnings at the end of this year will be $5.00 per share. Investors expect a 8.70% 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 38.25%? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Price $ ?

P/E ratio ?

Reference no: EM131338168

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