Castles in the Sand generates a rate of return of 15% on its investments and maintains a plowback ratio of .20. Its earnings this year will be $6 per share. Investors expect a 10% 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 $ 68.57

P/E ratio 11.43

b. Find the price and P/E ratio of the firm, if the plowback ratio is reduced to .10? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

Price $

P/E ratio