Alexas Corporation Reports the Following -If Price-To-Book Ratio at the End of 2005 Equals 1

question 28

Multiple Choice

Alexas Corporation reports the following:
$$\begin{array} { l l } & \mathbf { 2 0 0 5 } \\\text { Earnings per share } & \$ 1.80 \\\text { Dividends per share } & \$ 0.72 \\\text { Book value per share- at the end of the } &\$ 8.62\\\text { year } & \end{array}$$
-If price-to-book ratio 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

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