Castles in the Sand generates a rate of return of 10% on its investments and maintains a plowback ratio of 0.30. Its earnings this year will be $4 per share. Investors expect a rate of return of 8% 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 0.20. (Do not round intermediate calculations. Round your answers to 2 decimal places.)
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