Castles in the Sand generates a rate of return of 12% on its investments and mai

Question

Castles in the Sand generates a rate of return of 12% on its investments and maintains a plowback ratio of .40. Its earnings this year will be $3 per share. Investors expect a 10% rate of return on the stock.

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

Find the price and P/E ratio of the firm, if the plowback ratio is reduced to .30? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

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

Explanation / Answer

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