Castles in the sand generates a rate of return of 15 on its, Ask an Expert

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Castles in the Sand generates a rate of return of 15% on its investments and maintains a plowback ratio of 0.50. Its earnings this year will be $6 per share. Investors expect a rate of return of 12% 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 0.40. (Do not round intermediate calculations. Round your answers to 2 decimal places.)

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92813461

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