1. An analyst wants to calculate an appropriate price to earnings (P/E) ratio for a company that operated in a cyclical industry. The analyst determined that the company's average return on equity was 14.5 percent during the four-year period ending in 2008, and that the company's book value per share was $9.8 at the beginning of that period but had increased to $13.58 in 2008. If the company's stock is priced at $50 per share, the appropriate P/E is closest to: