Alexas Corporation Reports the Following -If Price to Book Value at the End of 2005

Alexas Corporation reports the following:
$\begin{array}{|l|l|}\hline&\mathbf{2 0 0 5}\\\hline \text { Earnings per share } & \$ 1.80 \\\hline \text { Dividends per share } & \$ 0.72\\\hline \text { Book Value per share-end of year } & \$8.62\\\hline\end{array}$
-If Price to book value at the end of 2005 equals 1.00, and return on beginning of year equity is expected to remain constant, then cost of equity (to nearest percent) equals:

A) 15%
B) 21%
C) 24%
D) Not determinable

Correct Answer:

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