Question
Castles in the Sand provides a 14% rate of return on their investment and keeps the withdrawal rate at 0.30. His earnings this year will
Castles in the Sand provides a 14% rate of return on their investment and keeps the withdrawal rate at 0.30. His earnings this year will be $4 per share. Investors are expecting a 10% return on the stock.
A. Find the firm's price and P/E ratio. (Do not round up intermediate calculations. Round your answers to 2 decimal places.) Price $ P/E ratio
b. If the withdrawal ratio is reduced to .20, find the firm's price and P/E ratio. (Do not round up intermediate calculations. Round your answers to 2 decimal places.) Price $ P/E ratio
Step by Step Solution
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To calculate the price and PE ratio we can use the dividend discount model Price Dividend Required R...
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Financial Reporting Financial Statement Analysis And Valuation A Strategic Perspective
Authors: James M Wahlen, Stephen P Baginskl, Mark T Bradshaw
7th Edition
9780324789423, 324789416, 978-0324789416
