Castles in the sand generates a rate of return of 20 on its, Ask an Expert

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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

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92408507

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