Please no CHATGPT or AI$.$

Seacrest Corporation is a privately$-$owned chemical company, that is expected to generate a return on equity of $20\%$ next period and is in stable growth, growing $4\%$ a year in perpetuity. Publicly traded chemical companies in stable growth, growing $4\%$ a year, have a return on equity of only $12\%$ and trade at $1\mathrm{.}6$ times book value. If publicly traded chemical companies are fairly priced and only $40\%$ of the risk in a chemical company is market risk, estimate the price to book ratio for Seacrest. $($The owner has his entire wealth invested in the company; the riskfree rate is $4\%$ and the equity risk premium is $5\%).$

Hint: PBV $=($ROE$-$g$)/($k$-$g$)$

A$.2\mathrm{.}5$

B$.2\mathrm{.}12$

C$.1\mathrm{.}54$

D$.1\mathrm{.}28$